LEM Annual Report 2007/08
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LEM Holding SA
P.O. BOX 785
CH – 1212 Grand-Lancy 1
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Phone +41 22 706 11 11
Fax+41 22 794 94 78
www.lem.com

Annual Report
2007/08
At the heart of power electronics

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LEM Holding SA, Geneva
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Fax+41 22 794 94 78

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ANNUAL REPORT 2007/08
Period 1st April 2007 to 31st March 2008

LEM at a glance

2– 4

Foreword

5–7

Business report

8– 9At the heart of…

10 –11

Corporate Governance

12 – 20

Financial results – Summary and comment

21– 24

LEM Group
Consolidated balance sheet

26

Consolidated income statement

27

Consolidated cash flow statement

28

Consolidated statements of changes in equity

29

Accounting policies

30 – 33

Notes to the consolidated financial statements

34 – 49

Group auditor’s report50

LEM Holding SA
Balance sheet

52

Income statement

53

Statement of equity

54

Notes to the financial statements

55 – 57

Auditor’s report

58

Information for investors

59

Group subsidiaries

60

LEM AT A GLANCE

LEM – At the heart of power electronics

ing industrial trends, such as miniaturization, higher perform-

LEM is a focused manufacturer and a global market leader. Its

ance levels and a greater degree of application integration andcore products, transducers for measuring electrical parame-

complexity. LEM has the strongest brand recognition in its

ters like current and voltage, are used in a broad range ofmarkets. Its products – commonly called “LEMs” – are at theapplications. Although these devices are not visible to the out-

heart of many power electronics applications.

side world, they are vital for application functionality and thebenefits provided to the end users. Starting with products for

LEM’s strategy is to exploit the intrinsic strengths of its core

locomotives in the seventies, LEM expanded into a vast areabusiness and develop opportunities in new markets with newof industrial applications, including variable speed drives forapplications. At the same time, LEM is committed to maintain-

motors and power supplies for industrial applications. Today,

ing customer focus and operational excellence by running

LEM’s current and voltage transducers are also used in AC/DC

cost-effective and service-oriented production platforms. Prof-

converters, uninterrupted power supply systems for comput-

itable growth is a key objective.

ers as well as in new innovative energy applications like microturbines, and wind and solar power generation. In addition,

Worldwide presence

new opportunities have been developed in the automotive

LEM is a global organization with production plants in Geneva

market for battery management and electrical motor controls(Switzerland), Machida (Japan) and Beijing (China). The com-

for steering and braking systems. This evolution underscorespany has sales offices close to its main clients’ locations andthe company’s exceptional skills in adapting to rapidly chang-offers seamless service around the globe.

PRODUCTION CENTERS (PDCs)
Geneva, Switzerland
Beijing, China
Tokyo, Japan
ADAPTATION CENTERS
Milwaukee, USA
Tver, Russia

SALES OFFICES
Geneva, Switzerland
Milwaukee, USA
Tver, Russia
Beijing, Shanghai, Shenzhen, China
Tokyo, Osaka, Japan
Braine-le-Comte, Belgium
Frankfurt, Germany
Paris, France
Skelmersdale, UK
Padova, Italy
Vienna, Austria
Barcelona, Spain
AGENTS/DISTRIBUTORS

2LEM AT A GLANCE

Key figures 2007/08
in CHF Millions

2007/08

2006/07

2005/06

Sales*EBIT*
In % of sales
Net earnings*

203.0
30.3
14.9%
21.7

184.5
25.5
13.8%
15.6

151.7
15.5
10.2%
9.1

Net earnings including discontinued operations
Shareholder’s equity
Net financial assets (+) / liabilities (–)
Market capitalization (per 31.3.)

21.7
70.1
23.7
310.5

15.6
64.9
12.2
311.4

25.0
69.7
24.2
184.8

*industrial and automotive segment

Regional sales breakdown 2007/08

2.2%

26.3%
53.1%
Europe18.4%

North America
Asia
Rest of the world

Sales in continuing operations
over 5 years per segment
CHF Millions
200

150

Industrial
segment

100

Automotive
segment

50

003/04 04/05 05/06 06/07 07/08

3

LEM AT A GLANCE

203 MCHF
+10 %

45.1%
+3.1p.p.

30.3 MCHF+18.6 %SALES GROWTHGROSS MARGIN

OPERATING PROFIT

21.7 MCHF+38.9 %

18.4 CHF+38.3 %NET EARNINGSEARNINGS PER SHARE

Share price evaluation LEHN Holding SA compared to SPI
400

CHF

350
300
250
200
150
100
50

LEHN
SPI

0
03.06 04.06 05.06 06.06 07.06 08.06 09.06 10.06 11.06 12.06 01.07 02.07 03.07 04.07 05.07 06.07 07.07 08.07 00.07 10.07 11.07 12.07 01.08 02.08 03.08 04.08

Share price chart (2 years benchmark SPI)
LEM has been listed on the SWX Swiss Exchange since 1986; LEHN

4

“As an independent components supplier
we deliver our products to the majorityof the industry leaders worldwide.”

FOREWORD

Dear Shareholders,

As an independent components supplier we deliver our products to the majority of the industry leaders worldwide. Market

We concluded another successful year with sales passing theshare and strategic focus have become key criteria of choice.

CHF 200 million mark! We have exceeded our outlook statements, both in terms of sales growth and in profitability

Many cost averse elements, like raw material increases, andgrowth.

revenue averse elements like the drop in the US dollar andprice pressure in the market, have lead us to accelerate the

The sales in our components business have doubled over thetransfer of production to our facility in Beijing China. This haslast 4 years by pure organic growth. The EBIT of the company

given us an important cost advantage for the selected trans-

increased by a factor of 10 and our net profit grew from about

ferred products. We were able to improve our gross margin

zero to over CHF 20 million, which is more than 10% of our

substantially during this year.

sales.
LEM is known for high quality products. We have reached theContinuation of our strategic focus

same highest standards at all the LEM manufacturing sites.

The main drivers for success have been and were in particular“Made by LEM” quality is now a goal that we have achieved.

this past year:• our pure play strategy

The market and business development• our focus on the customer and the market

During the year 2007/08 the market has been favorable• our stringent cost management

to our business, with the exception of the Automotive• our highest quality performance worldwide, “made by LEM”

segment.

We have been able to support our customers in our traditional

The demand for more energy, including renewable energies,

markets – Industry and Traction – with new and adapted prod-

and the need for energy efficiency, reliable energy and foructs and have increased our customer loyalty. At the same

mobility have been the tailwind for our development.

time, we have expanded our efforts to develop new markets
and products for new applications for our future growth in theOn the other hand the Automotive business, which so far ismarkets of Energy & Automation and Automotive.

based primarily in North America, is not developing as
expected. We suffered from the very weak US dollar and thecontinued market weakness for the North American car manufacturers.

Felix Bagdasarjanz

6

Chairman of thePaul Van Iseghem

Board of Directors

President & CEOFOREWORD

However new initiatives have been taken to ensure a better

Appropriation of the available earnings

and faster growth for this business. The prime focus is the

A top priority for LEM is to offer an attractive return on thedevelopment of the Asian market (Japan and China), where weshareholders’ investment. Last year we were able to pay out ahave secured contracts for several small volume hybrid car

regular dividend of CHF 4.50 to our shareholders, following ourmodels and additional new design-in projects are ongoing.

policy of a payout between 25% and 50% of the net earnings.

Due to the long lead times in the Automotive industry and the

As we remain confident about the outlook of the company, theuncertainty about the ramp-up of the hybrid technology, theBoard will recommend the payment of regular dividend of CHF

development of this business segment is difficult to predict.

7.00 per share, supplemented by an extraordinary dividend of

Therefore, we do not expect a major change for the year

CHF 4.00 per share to our shareholders.

2008/09.

ThanksFor the other markets, the business level is high: our last quar-

We would like to thank our shareholders for their continued

ter was a record quarter with record sales together with a very

faith in us. The year 2007/08 has been a good one for LEM

robust bookings level.

and we look forward to continued success in the years tocome.

Change in the conditions of thestock option plans

We also say thanks to our customers for their trust in our

The Board of Directors decided to modify as of 31 December

products, competence and service.

2007, the conditions of the stock options issued and not yet
exercised. Since then, the reporting method changed fromAnd last but not least, we would also like to thank our employ-equity settled to cash settled. The resulting fair value revalua-ees for their dedicated hard work. We are looking at a global

tion at the March closing – at a share price of CHF 270.00 –team of 1000 employees which is highly motivated and enthu-

generated an additional charge of CHF 4.3 million.

siastic about the future!

Felix Bagdasarjanz
Chairman of thePaul Van Iseghem

Board of Directors

President & CEO

7

BUSINESS REPORT

Profitable growth

In the Traction market, growth was over 22% and exceeded

In the financial year 2007/08, the business level remained very

our expectations. For this market, which was also LEMs firsthigh. We achieved double digit sales growth of 10% after themarket to serve, we are offering a full and renewed range ofvery high growth the previous year (21.7%).

products to our customers. The significant increase in sales isfuelled by the need to improve the public mobility systems inWith this result, we exceeded the outlook. We finished the year

developed and developing countries. There is a strong need towith a very strong 4th quarter and passed the CHF 200 million

make more trains, refurbish existing ones, improve the infra-

mark.

structure and allow for more cross-border traffic and metering
the energy consumption on board.

The profitability improvement continued, the operational profit
EBIT reached CHF 30.3 million which is an increase of 18.6%

In the Energy & Automation market, the continued focus is– despite the change in the accounting for the stock option

paying off. Sales have increased by over 60% – still coming

plans. The net profit of the Group improved to CHF 21.7 mil-from a small base. Many new products and applications arelion, due to the lower tax rates achieved by the changes madedeveloped, opening the total available market for LEM.

during the year in the legal structure of the Group.

Process control for factory automation, current monitoring andbattery monitoring for telecom antennas, data centers andWe also improved our balance sheet substantially. The returnother secure systems, energy consumption monitoring in

on capital employed (ROCE) is 60% and Free Cash Flow isindustrial and distribution sites. Besides our traditional OEM

CHF 17.5 million.

customer, we are developing a new VAR (Value added reseller)
sales channel to expand in this system related business.

The Industrial Segment continues
its success

Overall growth was the strongest in Western Europe, with an

Sales in the Industrial Segment reached CHF 182.8 million andincrease of 16.3%, followed by Asia at 9.6% and slightly nega-increased by 11.9%. The EBIT improved to CHF 31.8 million,

tive for NAFTA at – 4.8%. Of course this reflects the important

up by 24% compared to the CHF 25.7 million last year. At

currency effects of the year.

constant exchange rates, sales growth would have been
12.4%.

The growth in the BRIC countries (Brazil, Russia, India andChina) exceeded all others and is 28.5%.

In the Industry market growth was 8.6%. The result is driven
main market of motor controls but also from the significant

Automotive Segment: disappointing year
but new business secured

upswing in all renewable energy related areas. The motor con-This past year has been a challenge for the Automotive Seg-

trol market is expanding above average and is driven by thement. Sales amounted to CHF 20.3 million, –4.8% compared

substantial energy savings that are achieved in its applications.

to last year. EBIT was – CHF 1.5 million. At constant exchange

Renewable energy (wind and solar energy) now constituterates, sales growth would have been –1.2%.

by the increased demand from our customers especially in our

10% of our Industry sales with a growth rate of near 60%.
However other traditional Industrial applications were growing

The result is due to the substantial decline in production of theless and at a more typical economical growth rate.

US car manufacturers especially in the SUV market, superimposed by a very weak US dollar exchange rate. Though wehave moved the production to our plant in China, sales are primarily in US dollars and costs are in Euro, Swiss francs and
RMB’s, which all strengthened to the US dollar.

8

BUSINESS REPORT

We have focused on generating new business and have

Innovation is key

secured several new contracts in the hybrid car market in Asia,

Three product launches were made to complement our portfo-

China and Japan, and in Europe. Production of these products

lio, strengthening our position in high performance applications

starts in 2009, so next year will still be a transition year for thefor industrial drives and allowing a more complete offer ofAutomotive segment.

components in Energy & Automation.

The two main applications in the car are the battery manage-R&D efforts remain at a high 5.5% of sales with a special focus

ment – increasingly for the hybrid electric vehicles and theon innovation. On one hand, we intensified our collaboration

motor controls, like for Electronic Power Steering (EPS).

on advanced technologies with universities (especially with
Aachen, Lausanne and Tokyo), while on the other hand our

We are confident that we are on track for a new growth phase

R&D team succeeded in bringing to maturity a new state-of-after this 2008/09 year, allowing for the traditional long leadthe-art fluxgate technology for several new products to betime from design-in to production.

launched in 2008/09.

Operations:operational excellence continues

Thanks to our continuous efforts on improving design method-

Several developments made a substantial difference this year:

high quality product and production from the launch date.

ologies, our lean products development process is delivering• The accelerated transfer of the production of selected product lines to our facility in Beijing. This was done without serv-

Outlook: growth ahead

ice, nor quality issues, but making a big difference in our cost

The basic drivers for our business remain quite robust for the

structure. The build up of this facility allowed sales in China

short and medium term:

to triple and we will continue this trend. Many important cus-

• the need for more energy and the demand for more renew-

tomers have audited the Chinese factory, with success.

able energy.
• the need for reliable energy and for more controls and• Following the Customer and Employee survey that took
place in the 3rd quarter of 2007, we have launched several
projects to improve the administrative processes, especiallythe order to shipping to bill process. We have alreadyreached a major improvement, and are ready to launch astandby battery management.
• the need for better energy efficiencies, increasing thedemand for the more efficient motor controls.
• the need for more mobility, public transport and automotive
with a shift to more energy friendly solutions.

6 sigma project to reach best-in-class performances.
We closed the year on a quarter of high sales and expect this
• The focus on low cost global sourcing, using LEM’s total

positive trend to continue. Our major customers support thisleveraging effect, striving to improve not only cost but also

outlook though several clouds are in the sky keeping us cau-quality and service levels.

tious at this early time of the year.

LEM has achieved some major goals, in reaching top quality

The growth driven by our traditional applications in addition tolevels across all its plants, having a unified “made by LEM”

the growth of our new products and applications should allow

quality performance and in providing a seamless service to our

us to deliver another robust year.

customer’s requirements.

9

AT THE HEART OF…

Energy Metering on board Trains
The growth in the Traction market has been fuelled by various

LEM has developed the EM4T – Energy Meter for Traction

factors. There is an increasing demand for higher capacity due

which is the first universal energy meter for electric traction

to the requirement for more mobility of people and the trans-units with a formal approval to be utilized for billing purposes. It

portation of goods. Furthermore trains are considered as an

can be used in new multi-system locomotives but also can beenvironmentally friendly – or “green” means of transport. In a

retrofit into existing trains already in operation. The EM4T is a

lot of countries this demand is significant and far from com-highly accurate energy meter compliant to all relevant traction

plete – recent projects in India, China, Russia and parts thestandards for metering and onboard use. In its basic single-

Middle East are impressive.

phase version, the EM4T energy meter can be used in all
existing rail networks (600 V to 3000 V DC, 15 kV/16.7 Hz and

The liberalization and privatization of the rail networks in

25 kV/50 Hz AC). It is the only multi-network energy meter

Europe are a fact, in the UK there are 27 different train opera-

able to measure both AC and DC currents and can therefore

tor companies competing for the British railway market. The

be used for cross-border traffic on all existing networks.

development of the cross-border traffic has been identified asa key area of priority for many train operators and we are

The EM4T counts the energy that is being used by the loco-

seeing developments take place firstly in Europe but also more

motive. It can also measure the energy that is being generated

and more in the rest of the world.

by the regenerative braking, which is a process that reduces
speed by converting some of the kinetic energy back into elec-

This means that the operators will need to rely on many dif-tricity. This captured energy is either stored or fed back into

ferent energy providers for the journeys, but how do thethe network. All the energy values measured by the EM4T areproviders bill all these different operators?

gathered and stored in load profiles, which can be set to different intervals according to the need. These data recordings

These circumstances have created the need to be able tocontain parameters like date, time, events such as network

measure and allow for the billing of the energy needed by thechange, power off and on, train numbers, frequency andtrains independent of its company or origin.

absolute energy values for consumption and feedback ofactive and reactive energy. This data can be transmitted to thebilling center of the energy company or the central office of therailway provider to ensure the billing process, all made possibleby LEM transducers.

EM4T

10

AT THE HEART OF…

Photovoltaics
Due to the growing demand for solar energy, the manufactur-

LEMs transducers play multiple roles in the generation anding of solar cells and solar photovoltaic inverters has expanded

conversion of the electricity and the interface to the grid.

dramatically in recent years. Photovoltaic production has been
doubling every two years, increasing by an average of 50%

By precise measurement in the inverter LEMs transducers

each year since 2002, making it the world’s fastest-growing

ensure that the correct current and waveform is fed into theenergy technology. World solar photovoltaic market installa-

grid thus enabling high quality electricity. Another application intions reached a record high of 2.8 gigawatts peak (GWp) inthis process is to protect the inverter from short circuits and2007, this is the same amount that 2.8 nuclear power plants

overload. Here the current needs to be measured to detect

would generate. 90% of this generating capacity consists ofany significant sudden increases in order to shut off thegrid-tied electrical systems, where the energy that has been

inverter to protect it against overheating and short circuiting.

generated by the sun is fed into the energy grid. The four lead-

Furthermore it is vital to the employees’ safety to be able toing countries – Germany, Spain, Japan and the USA represent

detect any earth leakage current potentially happening, as thisnearly 90% of the total worldwide installed capacity, but a pro-would be a safety hazard. The transducers measure the cur-duction facility in China is announced, which is projected to berent to ensure that the circuits are not loosing any current any-

one of the largest in the world, with an annual capacity ofwhere.

around 1.5 GW.
A new application for LEMs Energy & Automation transducers
Photovoltaics is a method for generating power by using solar

is the so called “condition monitoring” of the strings. Here thecells packaged in photovoltaic modules, often electrically con-

DC current is measured directly to ensure that strings are allnected in multiples as solar photovoltaic arrays to convert

functioning properly and the panels are correctly oriented into

energy from the sun into electricity. Solar cells produce direct

the sun. Together with the other LEM transducers this will

current (DC) electricity, which can be used to charge a battery,ensure safe, high quality and optimal electricity generation.

but today the majority of photovoltaic modules are used forgrid connected power generation. In this case an inverter,
which is an electronic circuit that converts direct current (DC)to alternating current (AC), is required. The inverter contains
electronics that amplify, modify and synchronize the electricity
so that it matches exactly what is needed to operate in thegrid, namely AC current at a 50 or 60 Hz frequency.

CT - P

11

CORPORATE GOVERNANCE

The following information complies with the SWX Directive on

Cross-shareholdings

Information Relating to Corporate Governance, which has

LEM has no interlocking shareholding with other joint-stockbeen in effect since July 2002 including updates until 20 Sep-

companies.

tember 2007. Key elements are contained in the Articles ofIncorporation revised 1 October 2007. In cases where the

2 Capital Structure

required information is provided in other sections of this Annual

Capital and shares

Report, reference is made to the appropriate sections and

The nominal value of the share capital of LEM Holding SA is

page number(s).

CHF 575’000, which is divided into 1’150’000 fully paid-up
registered shares with a par value of CHF 0.50 each. There are

1 Group Structure and Shareholders

no shares with preferred voting rights. All shareholders areGroup structure

entitled to the same dividends.

LEM Holding SA is domiciled at 8, chemin des Aulx in CH-1228
Plan-les-Ouates, Geneva. LEM’s registered shares are listed

Detailed information about the capital structure in the last three

on the main segment of the SWX Swiss Exchange (LEHN,

years is shown in LEM Holding statutory accounts on page 54.

security no. 2 242 762; ISIN CH0022427626). On 31 March
There are no restrictions on the transfer of shares. In order to2008, the market capitalization was CHF 310.5 million.

be registered in the share register, each shareholder shall
The LEM Group is structured into the Industrial Segment anddeclare that he holds the shares for his own account.

the Automotive Segment. Appropriate segment reporting pursuant to IFRS is contained on pages 34 of the notes to the

On 31 March 2008, LEM Holding SA held no own treasury

consolidated financial statements. All companies in the LEM

shares. At the ordinary shareholders’ meeting of 29 June 2007

Group are listed under “scope of consolidation” on page 49,

the shareholders approved the cancellation of the 50’000

where the company names, registered offices, share capitals

shares resulting from the previously approved share buy-backand the relevant percentages of shares held are indicated.

program.

There are no other listed companies in the scope of consolidation.

Authorized and conditional capitalSignificant shareholders

profit sharing certificates or participation in certificates or any

On 31 March 2008 the following shareholders held 3% or moreconvertible bonds outstanding.

There is no authorized or conditional capital, nor are there anyof the share capital and voting rights:
Information on stock option programs is provided below under
Section 5, “Compensations and Shareholdings”, under Note

Shareholder
Werner O. Weber, in Zollikon, Switzerland

20.9%

19, “Stock option plans” on page 42 and in the notes to theSarasin Investmentfonds SA, in Basel, Switzerland

10.4%

LEM Statutory Accounts on page 57.

Threadneedle Asset management Holding Ltd,in London, United Kingdom

10.0%

Erwin Studer, in Zollikerberg, Switzerland

3.7%

Powe Capital management Ltd, in London,
United Kingdom

3.3%

Joraem de Chavonay SA, in Zug, Switzerland

3.3%

There are no known shareholder agreements between individual shareholders.

12

CORPORATE GOVERNANCE

3 The Board of Directors

ing on the issues, other members of Senior Management

Election, terms of office and cross-involvement

participate in the meetings in order to respond to specific

The Board of Directors is comprised of at least three members

questions. Decisions can be taken by the Board if at least half

who are individually elected for a mandate of one year, which isof the Directors are present, and a simple majority of them isrenewable up to an age limit of 70. The Board constitutes itself

sufficient. In the event of deadlock, the Chairman has the cast-and the Chairman is nominated by the Board. At the share-ing vote. Minutes of the meetings including decisions taken are

holders’ meeting on 29 June 2007, the current members Felix

prepared by the Outside Secretary of the Board and distrib-

Bagdasarjanz, Fritz Fahrni, Peter Rutishauser, and Anton

uted to the members of the Board, the CEO and the CFO.

Lauber, were re-elected. The shareholders elected Ueli
Wampfler, who represents the interest of shareholder W. O.

The Board of Directors reflects in its working procedures, theWeber, as a new member of the Board of Directors. Felix Bag-

efficiency and effectiveness of the teamwork as well as its

dasarjanz maintained the Chairmanship. All of the members ofinteraction with the management of the company on a regular

the Board are non-executive and have at no time been part ofbasis. A self-assessment moderated by an outside expert as

the executive management of LEM. Furthermore, they have nowell as regular feedback-sessions at the end of a meeting pro-significant business connections with the LEM Group.

vide valuable inputs for the continuous improvement of theBoard’s coherence and leadership.

Name

Position

Committees

Felix Bagdasarjanz

ChairmanMember NCC

Definition of areas of responsibility

Fritz Fahrni

MemberChairman NCC

The Board of Directors delegates the management of theAnton Lauber

MemberMember AC

company to the CEO to the fullest extent permitted by thePeter Rutishauser

MemberChairman AC

Swiss Code of Obligations. The Board of Directors reviews andUeli Wampfler

MemberMember NCC

assesses at least on an annual basis and takes decisions in

AC = Audit Committee

the following areas:

NCC = Nomination and Compensation Committee• Review and approval of the strategy, business plan, annual

Internal organizational structure• Approval of creation/closing of any subsidiary and pur-business objectives and budget for the LEM Group
The Board of Directors meets as often as necessary, but five to
six annual meetings are planned in advance. In the completedchase/sale of any interest in any company or entry into any
merger or joint venture agreement

financial year, two full-day, three half-day and two half-day• Appointing/dismissing of the Senior Management

preparatory meetings were held. These meetings usually take

• Monitoring the ethical and legal behavior of LEM

place at the company’s headquarters. The Chairman, after• Reviewing of human resources management, especially co-consultation with the CEO, determines the agenda for theworker satisfaction and management development

Board meetings, the members of the Board of Directors can• Monitoring LEM Group risk management and internal control

ask for additional items to be included. The Board members

strategy and procedures, legal, intellectual property, social &receive supporting documents beforehand which allows aenvironmental aspects.

good preparation of the meeting. As a rule the CEO and formost of the agenda items also the CFO attend the meetings ofthe Board of Directors without having a right to vote. Depend-

13

CORPORATE GOVERNANCE

Members of the Board of Directors
Education, professional background and other notable activities.
(Absence of information on other notable activities indicates that there are none of relevance.)
Education
Dr. of Electrical Engineering, ETH Zurich

Education
Dipl. Ing., ETH Zurich
PhD, Illinois Institute of Technology, Chicago,
USA
SMP, Harvard Business School, Boston,USA

Professional background
Since 2002, Independent businessconsultant
1999–2002, CEO of ESEC and Memberof the Executive Board of Unaxis
1997–1999, Member of the Executive Boardof ABB Switzerland
1992–1997, Managing Director ABB Drives
AG/ABB Industrie AG

Felix Bagdasarjanz
CH Nationality
Born – 1945
Chairman
Entry – 2002
Member NCC

Other notable activities
Member of the Board of Schneeberger
Holding AG, Roggwil, BE
Head of expert team (engineering sciences),
Federal Office for Professional Education andTechnology, The Innovation Promotion
Agency, KTI/CTI

Professional background
Since 2000, Professor for Technology
Management and Entrepreneurshipjointly at the ETH Zurich and the
University of St. Gallen
1988–1999, CEO of Sulzer Corporation

Fritz Fahrni
CH Nationality
Born – 1942
Member
Entry – 1999
Chairman NCC

Education
Dr. sc. nat., ETH Zurichlic. oec., HSG
Professional background
Since 1989, independent businessman,participation in and management of mediumsized companies

Peter Rutishauser

EducationFederal Proficiency Certificate
as a Mechanic
Certified Machinery Engineer,
Technical University Brugg-WindischPost-graduate studies in Management
University of Applied Sciences, Lucerne
University of St. Gallen:
Program for top managers in SMEs
IMD: Program Leading the Family Business

Other notable activities
Delegate of the Board of Directors of Equatis
AG and of Trisport AG,
Member of the Board of Directors ofGlatz AG, Foto Pro Holding AG,
Pavatex AG and WUPA Holding AG

CH Nationality
Born – 1956
Member
Entry – 2003
Chairman AC

Education
Lic. oec., University of Zurich
Certified auditor

Ueli Wampfler
CH Nationality
Born – 1950
Member
Entry – 2007
Member NCC

14

Professional background
Since 2004, Founder and Senior partnerof Wampfler & Partner AG, Zurich
1998–2004, Director STG Schweizerische
Treuhandgesellschaft, Zurich
1974–1998, STG Coopers & Lybrand, Zurich(partner since 1991)
As of 1986, entrepreneurial activities withown company-group (Swisa Holding AG and
PH Partner Holding AG)
Other notable activities
Member of the Board of Directors of Merbag
Holding AG, Zug;
Mercedes-Benz Automobil AG, Schlieren,
Merbag Immobilien AG, Schlieren
Caspar Finanz AG, Zug(Traco Power Group)
OFRAG Vertriebsgesellschaft, Lupfig
Fuchs-Movesa AG, Lupfig
Rebew AG, Zürich

Other notable activities
Member of the Board of Directors ofAmmann Industries, Langenthal;Business Tools AG, Zurich
Member of the Boardof University Hospital Balgrist, Zurich
Member of the Industrial Boardof CTI Start up, Bern
Head of the Investment Committeeof SAM Private Equity, Zurich
Member of the Swiss Science andTechnology Council, Bern
Individual member of the Swiss Academy ofTechnical Sciences

Anton Lauber
CH Nationality
Born – 1951
Member
Entry – 2004
Member AC

Professional background
Since 1998, Member of the Board of
Directors of Schurter Holding AG
and other group companies
Since 1993, Chairman of the Management of
Schurter AG, Lucerne, CEO and Delegate of
the Board of Directors, Member of the
Schurter-Group Management
1989, Technical Director Schurter AG,
LucerneUp to 1988, Managing Director
Generatorenfabrik ABB, Switzerland
Other notable activities
Chairman of ITZ (Innovation-Transfer Central
Switzerland) andLIV (Association of Lucerne Industries)
Member of the Board of Directors of Beutler
Nova AG, Gettnau
and Bossard Holding AG, Zug

AC = Audit Committee
NCC = Nomination and Compensation Committee

CORPORATE GOVERNANCE

Information and Control systems of the Board of• The primary objective of the Audit Committee (AC) is to

Directors vis-à-vis Management

provide the Board of Directors with effective support in finan-

The Board of Directors ensures that it receives sufficient infor-

cial matters in particular the selection and supervision of themation from the Senior Management to perform its supervisory

external auditor, assessment of the effectiveness, compli-

duty and to make the necessary decisions.

ance and clarity of the Group financial reporting and the

The Board of Directors obtains the information required to per-assessment and preparation of the financial reports to theform its duties through several means:shareholders. Furthermore, it reviews critical accounting poli-• The Board of Directors receives monthly and quarterly

cies, financial control mechanisms and compliance with cor-

reports on the current development of the business

responding laws and regulations as well as the development• Informal meetings and teleconferences are held as requiredand continuous improvement of the internal control system.

between the Chairman and the CEO as well as between the

If required, the external Group auditors are invited to partici-

Chairman and individual members of the Board

pate at the meeting. The AC prepares proposals to be• The Committees meet at regular intervals and exchangedetailed information with the Management• The Board receives detailed information to each agenda item

decided by the Board of Directors. In the completed financial
year two half-day meetings and two phone conference were
held.

one week before the board meeting• At least twice a year a session is held in the Board meeting
including all Senior Managers.

• The Nomination and Compensation Committee (NCC)
deals with succession, recruitment and compensation of themembers of the Board of Directors and the Senior Manage-

Internal Control Systemment. It ensures and monitors the personnel development

In view of the anticipated changes in the Swiss Code of Oblig-

plan and adequate succession planning for the middle andations, article 663b and 728a/b, the Board of Directors has ini-

top management. It reviews and updates the performance

tiated the review and the documentation of the control areas

based compensation system for the Senior Management.

and the relevant processes in order to ensure the correct

The NCC prepares proposals to be decided by the Board ofassessment of major risks affecting the financial performance

Directors. In the completed financial year six half-day meet-of the company (extended risk management) and the com-

ings and five telephone conferences were held.

plete and adequate reporting of the financial data (internal
control). The development of the system for internal control

4 Senior Management

has progressed with priority on the processes for the financial

None of the members of the Senior Management have otherreporting. The extended risk management project will be aactivities in governing or supervisory bodies, any official func-

priority for the coming financial year.

tions or political posts nor any permanent management functions for important Swiss and foreign interest groups.

Committees
Two standing committees support the Board of Directors. TheyManagement Contracts

are comprised of at least two non-executive and independent

There are no management contracts with companies or indi-members of the Board of Directors. They meet whenever nec-

viduals outside the LEM Group.

essary but at least twice a year.

15

CORPORATE GOVERNANCE

Members of the Senior Management
The Senior Management was comprised of the following members as of 31 March 2008:

Paul Van Iseghem

Ageeth Walti

Hans-Dieter Huber

Nationality: Belgian
Education: PhD, UCLA
Born – 1946
Function: President & CEO
LEM GroupWith LEM since 2000
Previous functions:
President LEM components
Previous companies andpositions: ITT CANNON,
Vice President Engineering& Operations

Nationality: Swiss
Education: MBA
Born – 1967
Function: CFO
With LEM since Sept. 2006
Previous companies andpositions: Financial positions
with Industrieholding
Cham, PWC, Unilever

Nationality: German
Education: Cert. Eng. (BA)
Born – 1959
Function: Vice President,
Industry
With LEM since 1995
Previous functions:
Business Development
ManagerPrevious companies andpositions: ABB, Division
Manager

Luc Colombel

Simon Siggen

Eric Favre

Nationality: French
Education: Engineer
Born – 1959
Function: Vice President,
Automotive and Traction
With LEM since 1996
Previous functions:
Business Development
ManagerPrev. companies andpositions: Arcelor Group,
Strategic Development andSales Manager

Nationality: Swiss
Education: Engineer EPFL
Master in Logistics
Born – 1967
Function: Vice President,
Operations
With LEM since 2002
Previous functions:Operations Manager
Previous companies andpositions: Leclanché,Business segment Director

Nationality: Swiss
Education: PhD, EPFL
Born – 1962
Function: Vice President,
Technology
With LEM since 2000
Previous functions:Technology Manager
Previous companies andpositions: ETEL Aerospace,
Director Aerospace division

A worldwide management meeting

16

CORPORATE GOVERNANCE

5 Compensation and Shareholdings

Compensation of former members

5.1 Board of Directors

In financial year 2007/08, no compensation was paid to a

General principles

former member of the Board of Directors.

Remunerations for the Board of Directors are approved by the
Board of Directors based on recommendations by the Nomi-

Options

nation & Compensation Committee.

A total of 3’939 options with a strike price of CHF 240.52 each
(SOP 6) were issued to members of the Board of Directors in

The remuneration of the Board of Directors is reviewed on an

fiscal year 2007/08.

annual basis.
For more details on financial compensation, see note 19 “Stock
Valid for the term of the mandate ending with the ordinary

option plans” on page 42 and the notes of LEM Holding Statu-

shareholders’ meeting on 29 June 2007 and therefore falling

tory Accounts on page 57.

into the reporting period of the fiscal year 2007/08, the Directors of the Board received an annual fixed fee based on their

5.2 Senior Management

position (CHF 60’000 for the chairman, CHF 30’000 for a

General principles

member). This amount covers the participation at up to six

Remunerations for the Senior Management are approved by

Board meetings including the personal preparation for meet-the Board of Directors based on recommendations by theings as well as occasional correspondence and contacts

CEO and the Nomination & Compensation Committee. The

related to Board matters. The participation in additional Board

remuneration of the CEO is proposed to the Board of Directors

meetings, telephone conferences, activities in committees andby the Chairman and decided in a private meeting of theother meetings and events directly related with the Director’s

Board.

responsibility as a member of the Board was compensated bya half-day rate in the amount of CHF 2’000 for the chairman

The remuneration of the Senior Management is reviewed on an

and CHF 1’500 for a member.

annual basis.

The payment of the total remuneration (fixed and variable part)

The total compensation for the Senior Management consists

for a one-year term is done once a year, immediately followingof a base salary, performance related bonus and performancethe ordinary shareholders’ meeting.

related stock options.

All members of the Board of Directors have received stock

Base compensation

options, using the same system as for the Senior Management

The base compensation is intended to give each Senior Man-

(see 5.2 below). Stock options have been granted based onager a fixed salary depending on the job characteristics,

the position of the Board member and the allocated numbers

market competitiveness and the manager’s skills and back-have been formally accepted by the Board of Directors.

ground. The salary evolution is dependent on the changes in
the job profile and the person’s general ability to fulfill the

For the term ending with the ordinary shareholders’ meeting

requirements of the job.

on 27 June 2008 the Board of Directors has decided to adopt
a remuneration scheme with a fixed fee paid in cash in the

Salaries are benchmarked each year with an experienced

amount of CHF 120’000 for the Chairman and CHF 60’000 forcompany close to the industry. The outcome is a market value

a member. Committee activity will be compensated with CHF

which is used as a guidance for the merit increase which takes

30’000 for the Committee’s chairman and with CHF 20’000 for

place in the early part of the new fiscal year.

its members. There will be no additional variable compensation
nor any participation in an equity based compensation plan.
The members of the Board of Directors are requested to build
up for their own account a minimum of 1’000 shares by May
2010.

17

CORPORATE GOVERNANCE

LEM incentive scheme

Stock options have a three year vesting period and thereafter a

LEM has a bonus system for Senior Management called thetwo year exercise period. If an employee leaves LEM for rea-

LIS (LEM Incentive Scheme). It consists of three elements:

sons other than retirement, disability or death, the participant• Personal performance to specific objectives (cap = 10% of

will generally forfeit unvested stock options.

annual base salary)• Team individual business performance to consolidated actual

The metric for allocating stock options is the SWX Index for

EBIT versus budget (cap = 15% of annual base salary, CEO

Small and Mid Cap companies in Switzerland. The maximum0%)

number of stock options granted is reached when the average• Business performance LEM to consolidated actual EBIT

stock price of LEM in the prior fiscal year is 10% or moreversus previous year (cap = 10% of annual base salary, CEOabove the index. No options are assigned if the stock price of

52.5%)

LEM in the prior fiscal year is 10% or more below the Index. A
linear interpolation is applied.

The bonus payments are made in the early part of the new
fiscal year based on the annual accounts and the personal

The strike price is determined as the average stock price ofperformance review conducted by the direct superior and

LEM shares between 1 January and 31 March of the runningapproved by the next level superior.

year.

LEM stock option plan (SOP)

Valid as from the reporting of the third quarter results of the

In addition to the base and variable compensation describedfiscal year 2007/08, the Board of Directors decided to change

above, Senior Management (and selected managers) may

all running stock option plans from equity settled to cash set-receive stock options. These awards are structured according

tled. The main reason for doing this was to increase the trans-

to the specified LEM stock option plan (SOP) with annual

parency regarding LEM’s financial obligations resulting from the

grants at the discretion of the Board of Directors. The number

granted stock options. Additional reasons were to avoid a mis-of stock options granted are allocated based on the position ofunderstanding about the dilution of the LEM shareholdings andthe Senior Manager and are formally accepted by the Board of

to take adequate financial provisions in view of the missing

Directors. The maximum total number of options granted has

funding of the SOP by conditional capital or treasury shares.

to stay below 3% of the total number of shares resulting in an
average number of options granted of around 1.5% of the

In the financial year 2007/08, the Board of Directors hired annumber of shares assuming annual grants and an average per-external consultant to review the equity based part of the com-formance of LEM according to the index.

pensation system and to propose a new solution. This project
has come to a successful completion in May 2008 and the
new solution called Performance Share Plan (PSP) will succeed the LEM Stock Option Plan (SOP) beginning with thefiscal year 2008/09.
Compensation of former members
In financial year 2007/08, no compensation was paid to aformer member of the Senior Management.
Options
A total of 10’500 options with a strike price of CHF 240.52
each (SOP 6) were issued to members of the Senior Management in fiscal year 2007/08.
For more details on financial compensation, see note 19 “Stock
option plans” on page 42 and the notes of LEM Holding Statutory Accounts on page 57.

18

CORPORATE GOVERNANCE

5.3 Pensions and Healthcare Plans

LEM in Germany

Pension benefits at LEM are designed to provide and con-

In addition to the legally required pension and health insur-

tribute to a reasonable level of retirement income reflecting theances, the company pays into an insurance pension plan for

number of years of service with LEM and also to help in theemployees.

case of disability or death.

6 Shareholders’ participation rights
As a general policy, the level of pension benefits provided to

The rules on shareholders’ participation rights are outlined in

employees is country-specific and is influenced by local market

the Articles of Incorporation. The rules for the convening ofpractice and regulations.

shareholders’ meetings, the participation rights and the majority rules for decisions are all following the Swiss law. The com-

The pension and healthcare benefits in the main countries

plete articles of Incorporation can be downloaded from thewhere LEM operates are described in more detail below.

Investor Relations pages on the internet page www.lem.com.

LEM in Switzerland

Voting rights and representation restrictions and inscription

The LEM pension plan operates a defined benefit plan thatin the share register

provides retirement benefits and risk insurance for death and

There are no limitations on voting rights for shareholders who

disability. The insured salary is based on LPP Swiss law and isare entered into the shareholders’ register with voting rights.

without limitation on the amount. The pension fund is funded

Anyone purchasing registered shares is registered by theby contributions from the company and the insured employ-

Board of Directors in the share register on request as a share-ees. The average contribution for the employee is 40% andholder with voting rights, provided he expressly declares that

60% for the company. For more information refer to note 2.18

the shares have been bought and will be held for his own

in the Accounting policies page 32.

account.

LEM does not provide healthcare benefits to its employees in

Each shareholder may be represented by the representative of

Switzerland.

the Company, by the independent representative, or by a third
party who need not be a shareholder of LEM Holding SA.

LEM in China
The pension plan is a government plan.

Statutory quorums
The Articles of Incorporation contain no deviation from theBoth company and employee pay a certain percentage for theapplicable law.

insurance each month. The healthcare is both a governmentand company plan.

Convocation of the ordinary shareholders’ meeting
Shareholders registered are convened to shareholders’ meet-

LEM in Japanings by ordinary mail and by publication in the Swiss gazette of

Only the government plan prevails.

commerce at least 20 days prior to the day of the meeting.
Any shareholder who, on the day determined by the Board of

The labour insurance (injury or disease regarding work) andDirectors, is registered as a shareholder has the right to attend

health insurance is for all employees. All employees are

and vote at the shareholders’ meeting.

included in the pension programs. There is a special pension
fund for Directors.

19

CORPORATE GOVERNANCE

AgendaType of service

One or several shareholders who collectively hold 10% of the

2007/08
In CHF

share capital can call for a shareholder’s meeting. Sharehold-

Audit services

251’300

ers with shares to a total value of at least CHF

Tax services

27’543

1 million can call for an item to be put on the agenda. They

Other services

24’161

must provide a description of the relevant motion. Appropriate

Total

303’004

applications must be submitted to the Board of Directors inwriting a minimum of 60 days before the ordinary share-

Other services include support for interim reviews and consult-holders’ meeting.

ing services related to the Internal Control project.

Dividend policy

Evaluation and control of the auditors is done by the Audit

The aim is to pay out 25 – 50% of the net profit in the form ofCommittee which makes recommendations to the Board ofdividends, to be decided by the Board of Directors.

Directors. In particular, the Audit Committee evaluates the performance, fees, and independence of the auditors.

7 Change of control and defensive
measures

The auditors report on the results of their audits both orally andDuty to make an offer

in writing. Based on the management letter, the annual finan-

In accordance with Art. 32 of the Swiss Federal Act on Stockcial statements and the consolidated figures are discussed in

Exchanges and Securities Trading (SESTA), any shareholder

the Audit Committee.

who exceeds 33.3% of the control of the company has tomake a public offer for all outstanding shares. The Articles of

In 2007/08 Ernst & Young participated in two regular Audit

Incorporation of the company do not provide for any excep-

Committee meetings. In each case Ernst & Young supplied thetions to this rule.

participants with written reports for the discussion.

Clauses of changes of control

9 Information policy

There is no particular clause in the Articles of Incorporation for

LEM informs its shareholders on the business status and itschanges of control. If dismissed in the case of a change ofresults on a quarterly basis. After the first six months a half-

control of the company, three members of the Senior Manage-

year report is published. This report, as well as the Annual

ment will receive additional severance payments equal to 6

Report, is distributed to all shareholders inscribed in the sharemonths remuneration.

register and made publicly available on its website
www.lem.com. Once a year, LEM holds a presentation for the

8 Auditors

media and financial analysts. Internal processes assure that

The Group auditors Ernst & Young Ltd, Geneva wereprice-sensitive facts are published without delay in accordance

appointed in 2005 initiating their mandate with the financial

with the ad hoc publicity rules of the SWX Swiss Exchange.

year 2005/06. The responsible partner since 2005 is Hans
Isler.

At www.lem.com, detailed information (e.g., the Articles ofIncorporation, interim and Annual Reports, Investor Presenta-

Ernst & Young charged the following fees for professional serv-

tions, as well as important dates) is available.

ices rendered for the 12 month period ending 31 March 2008.
Contact for investors and media:
Ageeth Walti, CFO,
8 chemin des Aulx,
CH-1228 Plan-les-Ouates,or send an e-mail to investor@lem.com(phone: +41 22 706 12 30).

20

FINANCIAL RESULTS“Profitable growth; 10% sales growth
results in 38.9% increase in net earnings.”

FINANCIAL RESULTS

Sales

Operating expenses

LEM sales grew 10.0% to CHF 203.0 million in 2007/08; at

The change in the conditions of the stock option plan (SOP)

constant exchange rates the sales growth would have beenfrom equity settlement to cash settlement makes a comparison

10.6%. The favorable effect of the EUR was overcompensatedof operating expenses difficult. For the full year, the additional

by a lower USD and JPY which resulted in an unfavorable

SOP expenses amount to CHF 4.3 million.

– 0.6% currency impact.
The following pro-forma calculation shows the comparable

Gross margin

figures:

The gross margin increased by 3.1% points to 45.1%. The
positive contributors to this effect were our persistent cost
reduction program and the transfer of production to China.
The positive currency impact in the first two quarters wasreversed in the second half, for the full year there was a slightly
unfavorable currency impact on gross margin level.
Proforma

ActualActual2007/08

2007/08

2006/07

TCHF

TCHF

TCHF

Sales

203’033

203’033

184’555

Cost of goods sold(111’445)(111’445)(107’068)

Gross margin

91’58891’58877’487

Sales expense(23’676)(24’276)(21’217)Administration expense(22’729)(26’332)(20’807)

Research & development expense(11’103)(11’232)(10’032)(407)

Other expense

(31)

(31)

Other income

581

581

533

Operating profit

34’63030’29825’557

Financial expense

(965)

(965)

(1’083)Financial income

287

287

294

Exchange effect

(735)

(735)

77

33’21728’88524’845

Earnings before taxes
Income taxes(8’271)(7’193)(9’225)Net earnings

24’946

21’692

15’620

SOP charge in P&L

1’000

5’332

981

22

FINANCIAL RESULTS

Net sales

Gross margin

CHF Millions

Operating expenses (incl. R&D expenses)

CHF Millions

200% of Sales
50%

90

175

CHF Millions% of Sales

60

60%

75

45%

50

50%

60

40%

40

40%

45

35%

30

30%

30

30%

20

20%

15

25%

10

10%

20%

0

150
125
100
75
50
25

0

03/04

04/05

05/06

06/07

07/08

03/04

R&D expenses

04/05

05/06

06/07

07/08

EBIT

CHF Millions% of Sales

12

12%

0%
03/04

04/05

05/06

06/07

07/08

Net earnings% of Sales

CHF Millions
30

30%

25

25%

20

20%

15

15%

10

10%

5

% of Sales
12%

CHF Millions

20
10%
9

9%

6

6%

3

3%

0

0%
03/04

04/05

05/06

06/07

16

0

07/08

Net financial assets (–) / liabilities (+)
CHF Millions

03/04

04/05

05/06

06/07

12

6%

8

4%

5%

4

2%

0%

0

07/08

0%
03/04

Capital employed & ROCE
CHF Millions

8%

04/05

05/06

06/07

07/08

Equity & ROE% Capital employed

CHF Millions% Equity
35%

70
50

60%

21

30%

60
40

48%

30

36%

20

24%

10

12%

50

25%

40

20%

30

15%

20

10%

10

5%

15

9

3

–3

0
2004/05

2005/06

2006/07

2007/080%
2004/05

2005/06

2006/07

2007/080%0
2004/05

2005/06

2006/07

2007/08

23

FINANCIAL RESULTS

The cost control on operating expenses is closely managed.

Financial expenses

Although the absolute pro-forma expenses increased 9.7% toThe financial expenses increased from CHF 0.7 million to CHF

CHF 57.0 million, as a percentage of sales the ratio remained

1.4 million in 2007/08. After exchange gains of CHF 0.1 million

constant at 28.1%. After adjustment for the additional CHF 4.3

in 2006/07, in 2007/08 LEM incurred exchange losses of CHF

million SOP expenses, the operating expenses increased to

0.7 million.

30.2% of sales.

Taxes
Looking forward, the impact of the SOP will have to be calcu-

The normalized tax rate decreased from 37.3% to 28.2%. The

lated quarterly based on the LEM share price:

main reasons are the change in the tax mix from the different• If the LEM share price remains constant at the closing rate

countries and the reorganization of the Group with the creation

as of 31 March 2008, the annual charge would be CHF 2.0

of LEM International for the trading flows.

million.
• If the LEM share price increases from CHF 270 as of 31

In 2007/08 some favorable one-time effects further reduced

March 2008 to CHF 320 as of 31 March 2009, the annual

the tax ratio: A tax return and the release of a tax provision fol-charge would be CHF 4.7 million.

lowing the closing of a tax investigation. This results in a Groupeffective tax rate of 24.9%.

The R&D expenses, which are part of the operating expenses,
increased by 12.0% to CHF 11.2 million. The sales ratio

Net earnings

increased slightly from 5.4% to 5.5%.

Net earnings increased 38.9% compared to 2006/07, resulting
in CHF 21.7 million.

Operating result (EBIT)
As a result of the positive development of the gross margin

Balance sheet

which overcompensates the additional SOP expenses of CHF

The Balance sheet remains healthy with an equity ratio of 61%.

4.3 million, the EBIT increases by 18.6% to CHF 30.3 million.

Efficient cash management has allowed reducing the financial
liabilities from CHF 7.6 million to CHF 2.1 million as of 31
March 2008.
The working capital (trade debtors+ inventory – trade payables)
as % of sales reduced from 22.2% to 21.2%. The main contribution came from inventories, which decreased from CHF 25.1
million to 22.4 million.

Cash flow
The improved working capital ratio is reflected in the change
in net working capital which decreased from minus CHF 10.7
million to minus 2.3 million. Together with the increased net
earnings this results in a free cash flow of CHF 17.5 million,
compared to CHF 8.2 million in 2006/07.

Ageeth Walti
CFO

24

LEM GROUPCONSOLIDATED BALANCE SHEET

Assets31.03.08

31.03.07

TCHF

TCHF

25’78741’1692’051
22’411

19’79838’7262’140
25’082

91’41885’746165130
18’450
4’429

903
73
17’067
4’377

Total non-current assets

23’17422’420Total assets

114’592

108’166

31.03.08

31.03.07

TCHF

TCHF

17’034
650
9’639
4’798
3’416
2’087

16’332
345
9’566
4’909
983
7’556

37’62439’691

5’395
0
77
1’380

1’921
17
50
1’607

Total long-term liabilities

6’852

3’595

Total liabilities

44’47643’286575
16’20053’140600
22’537
41’56569’915201

64’702178

Equity70’11664’880Total liabilities and equity

114’592

108’166

Current assets
Cash and cash equivalents
Trade debtors and other debtors
Other current assets
Inventories

Notes

1
2
3

Total current assets
Non-current assets
Deferred tax assets
Other financial assets
Property, plant and equipment
Intangible assets

Liabilities and equity
Short-term liabilities
Trade and other payables
Other short-term liabilities
Accrued expenses and deferred income
Current income tax payable
Short-term provisions
Short-term financial liabilities

16
4
5

Notes

6
7

9
22

Total short-term liabilities
Long-term liabilities
Long-term provisions
Long-term financial liabilities
Other long-term liabilities
Deferred tax liabilities

EquityShare capital
Reserves
Retained earnings
Equity attributable to equity holders of the parent
Minority interests

9
22
16

10

11

The accompanying notes are an integral part of the consolidated financial statements.

26

CONSOLIDATED INCOME STATEMENT

April to MarchNotes

2007/08

2006/07

TCHF

TCHF

203’033(111’445)

184’555(107’068)

Gross margin

91’58877’487

Sales expense
Administration expense
Research & development expense
Other expense
Other income(24’276)(26’332)(11’232)(31)581(21’217)(20’807)(10’032)(407)
533

Operating profit

30’29825’557

(965)
287
(735)

(1’083)294
77

28’88524’845(7’193)(9’225)Net earnings

21’692

15’620Attributable to:
LEM shareholders
Minority interests

21’60983

15’54179

Net earnings

21’692

15’620

18.4
18.4

13.3
12.9

Sales
Cost of goods sold

Financial expense
Financial income
Exchange effect

13
14
15

Earnings before taxes
Income taxes

16

Earnings per share for profit attributable to the equity holdersof the company during the year

Earnings per share
Earnings per share undiluted
Earnings per share diluted

17
17

The accompanying notes are an integral part of the consolidated financial statements.

27

CONSOLIDATED CASH FLOW STATEMENT

April to MarchNotes

2007/08

2006/07

TCHF

TCHF

21’692

15’620

6’723
678
5’332
4’490
252
0
287
(965)
(6’763)(5’471)
26’255891(3’845)675(2’279)

7’983
789
981
4’141
1’899
275
294
(1’083)(5’288)(428)
25’184(5’722)(7’201)
2’233(10’690)

Cash flow from operating activities

23’976

14’494

CASH FLOW FROM INVESTING ACTIVITIESInvestment in tangible fixed assets
Disposal of tangible and intangible fixed assets
Investment in intangible fixed assets
Increase in other financial assets(6’018)
99
(463)
(125)

(6’560)
239
(259)
283

Cash flow from investing activities(6’507)(6’296)

CASH FLOW FROM FINANCING ACTIVITIESTreasury shares acquired via share buy-back program
Dividends paid to the shareholders of LEM Holding SA
Dividends paid to minorities
Derivative financial instruments
Increase (+) in financial liabilities
Decrease (–) in financial liabilities

0(5’175)(38)
146
28(5’346)(7’820)(11’725)
(26)
0
7’023
(570)

Cash flow from financing activities(10’385)(13’117)

Change in cash and cash equivalents

7’084(4’920)Cash and cash equivalents at the beginning of the period
Exchange effect on cash and cash equivalents

19’798(1’094)25’395(677)

Cash and cash equivalents at the end of the period

25’787

19’798

CASH FLOW FROM OPERATING ACTIVITIESNet earnings
Adjustment for non-cash items– Current income taxes– Net financial result– Expenses for share-based payments– Depreciation and amortisation– Increase (+) / decrease (–) of provisions and deferred taxes– Loss on disposal of fixed assets
Interest received
Interest paid
Taxes paid
Expenses for cash settlement / Share-based payments paid
Cash flow before changes in net working capital
Change in inventory
Change in debtors and other current assets
Change in payables and current liabilities
Cash flow from changes in net working capital

28

CONSOLIDATED STATEMENTS OF
CHANGES IN EQUITY

Attributable to equity holder of the company
SharecapitalCapitalreserves

Reservefor treas.
sharesBalance on 1 April 2006
Dividends paid
Dividends paid to minority interests
Attribution of earnings
Currency translation difference
Stock option plan
Treasury shares

600

26’8290Balance on 31 March 2007
Gains & losses recognised
directly in equity

TCHF

Treasury Fair value
shares reserves

00

Stock Currency
option translation
plan
diff.
508

3’562

Retainedearnings

MinoritiyInterest

Total
equity38’118(11’725)123(7’820)

7’820(7’820)600

19’0097’820(7’820)

0

1’429

2’099

41’565178

69’740(11’725)(26)
15’620(1’462)553(7’820)064’880

0

0

0

0

0

(60)

(1’464)(368)

2(1’891)

Balance on 1 April 2007
Changes in capital
Dividends paid
Dividends paid to minority interests
Attribution of earnings
Currency translation difference
Unrealized gain on derivatives
designated as cash flow hedges
Stock option plan
Treasury shares

600
(25)

19’00925

7’820(7’820)

0

1’429

2’099

41’565178

64’8800(5’175)(38)
21’692(5’101)

Balance on 31 March 2008
Gains & losses recognised
directly in equity575
0

15’541(1’464)
921

(26)
79
2

(368)

(5’175)21’609(5’079)

(38)
83
(22)

146
(1’429)146(6’288)0(4’859)(7’820)

7’820

19’034

0

0

146

0

(2’980)53’140201

70’116

0

0

0

146

(612)

(5’079)(4’859)(22)(10’426)

The amount available for dividend distribution is based on LEM Holding SA’s shareholders’ equity determined in accordance withthe legal provisions of the Swiss Code of Obligations.

29

ACCOUNTING POLICIES

1 General information
The LEM Group (the Group) is a market leader in providing innovative andhigh quality solutions for measuring electrical parameters. Its core products– current and voltage transducers – are used in a broad range of applications in industrial, traction, energy and automotive markets. The Group has
operations in 10 countries and employs around 1’000 people. The parent
company of the LEM Group is LEM Holding SA (the Company), which is alimited company incorporated in Switzerland.
The financial year ends on 31 March. The registered office is as follows:
8, chemin des Aulx; CH-1228 Plan-les-Ouates/Geneva. The Company has
been listed on the SWX Swiss Exchange since 1986.
The Board of Directors approved the consolidated financial statements on
19 May 2008.

2 Summary of significant accounting principles
2.1 Basis of preparation
The consolidated financial statements of LEM Group have been prepared inaccordance with the International Financial and Reporting Standards (IFRS)
and interpretations published by the International Accounting Standards
Board (IASB) and comply with Swiss law.
The consolidated financial statements have been prepared using the historical cost convention except that, as discussed in the accounting policies
below, certain items like derivatives are recorded at fair value.
2.2 Adoption of new and revised International Financial Reporting Standards
and Interpretations
In 2007/08, LEM Group introduced the following revised standards andinterpretations:Standard Description

Impacton LEM GroupIFRS 7IAS 1
IFRIC 7

New disclosures
New disclosures
None

IFRIC 8IFRIC 9IFRIC 10

Financial Instruments: Disclosures
Presentation of financial statements
Applying the restatement approach underIAS-29 Financial reporting inHyper-inflationary economies
Scope of IFRS-2
Reassessment of embedded derivatives
Interim financial reporting and impairment

None
None
None

LEM Group will adopt the following revised standards and interpretations in
the future:
Standard orinterpretation
IAS-1 revised
IAS 23 revised
IAS 27 revised
IAS 32 amended
IFRS 2 amended
IFRS 3 revised
IFRS 8IFRIC 7IFRIC 11/IFRS 2IFRIC 12IFRIC 13IFRIC 14/IAS 19

Title

Effective datePresentation of financial instruments
Borrowing cost – amendment
Consolidated and separate
financial statement
Financial instruments: Presentation
Share-based payments –vesting conditions and cancellations
Business combinations – revised
Operating segments
Applying the restatement approach
under IAS 29 “Financial reporting in
hyperinflationary economics”
Group and treasury share transactions
Service concession arrangements
Customer loyalty programmes
The limit on a defined benefit asset,
minimum funding requirements
and their interaction

1 January 2009
1 January 2009
1 July 2009
1 January 2009
1 January 2009
1 July 2009
1 January 2009

1 March 2007
1 March 2007
1 January 2008
1 July 2008

1 January 2008

The Group will implement the relevant new standards when they become
effective. The impact from applying above standards and interpretations has
not been evaluated but is expected to have no material effects on the capital, financial, income or cash flow situation of LEM.

30

2.3 Summary of critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires
management to make estimates and assumptions that affect the reported
amounts of revenues, expenses, assets, liabilities and related disclosures atthe date of the financial statements. These estimates are based on management’s best knowledge of current events and actions that the Group mayundertake in the future. However, actual results could differ from those estimates. The most important sources of uncertainty are described below.
Impairment of goodwill and property, plant and equipment
The Group tests annually whether goodwill has suffered any impairment inaccordance with the accounting policy. The recoverable amounts of cash
generating units have been determined based on value-in-use-calculations.
Property, plant and equipment is assessed according to the same rules.
These calculations require the use of estimates in particular to the expected
growth of sales, discount rates and development of raw material prices.
Provisions
Provisions are recognised only if the specific criteria under IFRS are met.
Provisions represent presumed obligations arising from past events and arerecognised only if their amount can be estimated reliably. Nevertheless, provisions are based on assumptions.
Income and other taxes
LEM Group is subject to income taxes in numerous jurisdictions. Judgement
is required in determining the worldwide provision for income taxes. There
are many transactions and calculations for which the ultimate tax determination is uncertain in the ordinary course of business.
Employee benefits
The standard requires that certain assumptions are made in order to determine the amount to be recorded for retirement benefit obligations and pension plan assets, in particular for defined benefit plans. These are mainly
actuarial assumptions such as expected inflation rates, employee turnover,
expected return on plan assets and discount rates. Substantial changes in
the assumed development of any of these variables may significantly
change LEM Group’s retirement benefit obligation and pension plan assets.
2.4 Basis of consolidation
The consolidated financial statements are comprised of LEM Holding SA
and of its subsidiaries.
Subsidiaries
Subsidiaries, which are those entities over which the Group has the power
to exercise control over the operations, which is normally the case when it
owns more than one half of the voting rights, are consolidated.
For the consolidation of capital, the purchase method is used. Companies
that are acquired or sold during the financial year are included in the Groupfinancial statements up to the date of transfer of control. The costs of purchasing a company are determined as the sum of the fair value of the assetsthat are to be paid to the seller and the obligations that are entered into, or
acquired, on the date of purchase plus the cost that can be directly allocated. Identifiable acquired assets, liabilities and contingent liabilities arerecognised at their present value as of the date of their acquisition. The
Group’s share of the purchase price that exceeds the fair value of the identifiable net assets is recognised as goodwill.
Intra-group assets and liabilities as well as income and expenses are set off
against each other.
Also Intra-group intermediate profits on inventories and fixed assets are
eliminated.

ACCOUNTING POLICIESAssociates
Investments in associated undertakings are accounted for using the equity
method. These are undertakings over which the Group exercises significant
influence, but which it does not control.
No associated undertakings exist as per 31 March 2008 and 31 March
2007.
Joint ventures
In jointly controlled entities the method of proportionate consolidation isapplied.
No jointly controlled entities exist as per 31 March 2008 and 31 March
2007.
2.5 Foreign currencies
Functional and presentation currency
The consolidated financial statements are presented in Swiss francs as thepresentation currency. The individual subsidiaries use the local currency as
their functional currency, which is the currency of the primary economic
environment in which they operate.
Foreign currency translation
All assets and liabilities in the balance sheets of subsidiaries that are denominated in the respective functional currencies are translated into Swiss francs
at the year-end exchange rate. Items in the income statement and cash flow
statement are translated at the average exchange rate for the year. The
resulting translation differences are recognised in shareholders’ equity. Whena company is sold, the cumulative translation differences recognized inshareholders’ equity are transferred to the income statement.
The following table summarizes the principal exchange rates that have beenused in the translation process.
Currency Statement ofincome 07/08
Average rate
in CHF

Statement ofincome 06/07
Average rate
in CHF

Balance sheet
31.3.2008
Year-end rate
in CHF

Balance sheet
31.3.2007
Year-end rate
in CHF

EUR
GBP
JPY
USD
RUB
CNY

1.587
2.342
0.0106
1.238
0.046
0.157

1.57
1.99
0.01
1.0
0.042
0.142

1.624
2.390
0.0103
1.218
0.047
0.158

1.64
2.33
0.0102
1.16
0.046
0.156

Foreign currency transactions
Foreign currency transactions by subsidiaries are translated at the market
rate prevailing at the time. The monetary assets and liabilities are translated
at the year-end rates while non-monetary assets are translated at historicalrates. Gains and losses arising from the transactions as well as from thetranslation of monetary assets and liabilities in foreign currencies arerecorded as income or expenses in the income statement (except fromtranslation differences arising from a monetary item that forms part of theGroup’s net investment in a foreign operation, which are included in shareholders’ equity).

2.6 Segment information
LEM Group’s primary reporting segment is business segments and thesecondary reporting format is geographical. The definition of business andgeographical segments of the Group is based on the managerial and organisational structure of the Group as well as on the financial reporting system.
LEM Group’s business segments are Industrial and Automotive. The Industrial segment develops, manufactures and sells electronic components
called transducers for the measurement of current and voltage of various
industrial applications. The Automotive segment develops, manufacturesand sells transducers for applications in automotive markets. Non-allocatedassets correspond to cash, long-term financial receivables as well asdeferred tax assets. Non-allocated liabilities comprise bank borrowings,
income tax payable and provisions for deferred taxes.
LEM Groups geographical segments are Europe, North America, Asia andRest of world.
Transactions between the business segments are conducted at arms’length.
2.7 Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at cost. Cashand cash equivalents comprise cash on hand, cash at bank and cash at
postal accounts and bank deposits with an original maturity of three months
or less from the date of acquisition, that are readily convertible to known
amounts of cash. This definition is also used for the cash flow statement.
2.8 Trade debtors
Trade debtors are carried at original invoice amount less an estimate madefor doubtful receivables based on a review of all outstanding amounts at the
year-end. Provisions for bad debt are established when there is an objective
indication that the Group will not be able to collect the amounts due. Bad
debts are written off when identified.
2.9 Inventories
Inventories are stated at the lower of cost or net realisable value. Cost isdetermined by the first-in, first-out (FIFO) method. The cost of finishedgoods and work in process comprise raw materials, direct labour costs andother costs that can be directly allocated, such as production overhead
expenditures. Financing costs are not included in inventories.
2.10 Derivative financial instruments
Derivative financial instruments are initially recognised at cost and are subsequently re-measured at their fair value. With the exception of derivative
financial instruments that qualify for hedge accounting, changes at fair valueof derivative financial instruments are recognised in the income statement.
Derivative financial instruments are shown as part of other current assets
and other current liabilities. In case the maturity is more than one year, derivative financial instruments are recognised under other non-current financial
assets or other non-current financial liabilities.
LEM Group does apply hedge accounting. For a derivative financial instrument to be recognised as a qualified hedging transaction, certain requirements regarding documentation, probability of occurrence, effectivenessand reliability of measurement, both of the hedging instrument and of thehedged underlying transaction, must be fulfilled. In case of qualified hedging
transactions of future cash flows (cash flow hedge), the hedging instrument
is recognised at fair value. Of the change in fair value of the hedging instrument, the part that is effective for the hedging transaction is recognised inshareholders’ equity and the remaining ineffective part is recognised in theincome statement in the financial result. When the hedging transaction ismaturing, the cumulative gains and losses previously recognised in shareholders’ equity are included in the income statement of the period.
The Group uses financial instruments to hedge foreign exchange risks offorecasted transactions (cash flow hedging). Derivative financial instruments
can comprise of forward exchange contracts and option based structures.
Currently the LEM Group applies hedge accounting for one derivative financial instrument in place. No hedge accounting was applied to any othertransaction carried out during the financial years 2007/08 and 2006/07.

31

ACCOUNTING POLICIES

2.11 Property, plant and equipment
Property, plant and equipment is stated at cost of acquisition or construction less depreciation and any impairment. Depreciation is calculated on thelinear basis on the following estimated useful life:Land
nil
Buildings
20–40 years
Machinery & Equipment
5–8 years
Tools & Moulds
2–5 years
Vehicles
3–5 years
IT equipment
3–5 years
Repairs and renewals are charged to the profit and loss account when the
expense is incurred. Subsequent expenditure on an item of tangible fixed
assets is capitalized at cost only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of theitem can be measured reliably.

2.15 Financial assets
Financial assets can comprise of marketable debt securities with a fixed
duration, marketable securities, derivative financial instruments and loans.
Currently LEM Group has no marketable and equity securities, nor any loans
and long-term receivables in its books.

2.12 Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fairvalue of the Group’s share of the net assets of the acquired subsidiary/associated undertaking at the date of acquisition. Goodwill on acquisitions isreported in the balance sheet as an intangible asset and carried at cost lessaccumulated impairment losses. Goodwill is tested annually for impairment.
Gains and losses on the disposal of an entity include the carrying amount of
goodwill relating to the entity sold.

2.17 Financial liabilities
Financial liabilities comprise of bank loans and are recognised initially as theproceeds received, net of transaction costs incurred. In subsequent periods,bank loans are stated at amortised cost using the effective interest rate
method with any difference between proceeds (net of transaction) and theredemption value being recognised in the income statement over the termsof the borrowing.
Financial liabilities that are due within 12 months after the balance sheet
date are classified as short-term liabilities unless the Group has an unconditional right to defer settlement of the liability until more than 12 months after
the balance sheet date.

Research and development
Research costs are written off as incurred. Development costs are capitalized as intangible assets only, if it is probable that future economic benefits
will flow to the Group. Such development costs are capitalized and written
off over the life of the product or process.
In the financial years under review, no development costs have been capitalized.
Other intangible assets
Other intangible assets with definite useful lives are carried at costs lessamortization and any impairment.
Expenditure on computer software, acquired patents, trademarks andlicences is capitalized and amortised using the straight-line method overtheir useful lives, not exceeding five years.
2.13 Impairment of tangible fixed assets and intangible assets
Assets that are subject to depreciation and amortisation are reviewed for
impairment whenever events or changes in circumstances indicate that thecarrying amount may not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair valueless costs to sell and value in use.
For the purpose of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash-flows (cash generating
unit).
The value in use is calculated based on the estimated future cash flows
expected to result from the use of the asset and eventual disposal, discounted using an appropriate long-term interest rate.
2.14 Assets held for sale
LEM Groups assets are reclassified as held for sale when a sale within one
year is highly probable and the assets are available for immediate sale intheir present condition.
Tangible and intangible assets held for sale are re-evaluated at the lower offair value less cost to sell or the carrying amounts at the date they meet theheld for sale criteria. Any resulting impairment loss is recognised in the profit& loss account. In the two years under review there were no assets held forsale in LEM Group.

32

2.16 Leases
Assets acquired under long-term finance leases are capitalised as part of
the fixed assets and depreciated over the shorter of the estimated useful lifeof the asset and the lease term.
The associated obligations are included dependent on their maturity in current or non-current financial liabilities respectively. Currently LEM Group
does not hold any finance lease.
Rentals payable under operating leases are charged to the profit & loss
account as incurred.

2.18 Employee benefits
The Swiss subsidiaries provide a defined benefit plan for employees; theother subsidiaries provide defined contribution plans. The charges areincluded in the personnel expenses of the various functions where theemployees are located.
Defined benefit plan
A qualified independent actuary values the funds on an annual basis. The
obligation and costs of pension benefits are determined using the projected
unit credit method. Past service costs are recognised on a straight-line basis
over the average period until the amended benefit becomes vested. Gainsor losses on the curtailment or settlement of pension benefits are recognised when the curtailment or settlement occurs. Actuarial gains or losses
are amortised based on the expected average remaining working time of theparticipating employees, but only to the extent that the net cumulative
unrecognized amounts exceed 10% of the greater of the present value ofthe defined benefit obligation and the fair value of plan assets at the end of
the previous year.
Defined contribution plan
The subsidiaries abroad sponsor defined contribution plans based on local
practices and regulations.
The Group’s contribution to defined contribution plans are charged to theincome statement in the period to which the statement relates.
Other long-term employee benefits
Other long-term employee benefits include long-service leave or sabbaticalleave, medical aid, jubilee or long-service benefits and, if they are notpayable wholly within 12 months after the year end, bonuses and deferredcompensation. All actuarial gains and losses are recognised immediately in
the income statement, no corridor approach is applied.

ACCOUNTING POLICIESEquity compensation plan
LEM Group operates several stock option plans. Stock options are granted
to the Board of Directors and managers. The attribution is linked to theshare price development.

2.21 Minority interests
Minority interests represent the portion of profit or loss and net assets notheld by the Group and are presented separately in the consolidated statement of income and within equity in the consolidated balance sheet.

2.19 Provisions and contingent liabilities
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events and it is probable that an outflow ofresources will be required to settle the obligation.

2.22 Revenue recognition
Revenue from the sale of products comprises all revenues that are derived
from sales of products to third parties after deduction of price rebates andvalue added tax. Revenues from the sale of products are recognised in theincome statement as soon as the products have been shipped and theassociated benefits and risks have been transferred to the purchaser.

Claims and litigations
The Group recognises the estimated liability to replace products still underwarranty at the balance sheet date. This position is calculated based on
past history of the level of repairs and replacements.
Employee and termination benefits
These obligations are covered by a provision in the balance sheet according
to the legal requirements of certain countries.
Stock option plans
As of 31 December 2007 the plans have been changed from equity settled
to cash settled.
The total amount expensed for the options not yet exercised is determinedby reference to the fair value of the instruments granted at each closing
period. The quarterly fair value calculations are performed by a third party
applying the “Hull & White” model based on the LEM share price at theperiod end. The amounts are charged to the income statement andadjusted in the provisions which are built up pro-rata during the vesting
period.
At each balance sheet date, the entity revises its estimates of the number of
options that are expected to become exercisable and recognises theimpact, if any, in the income statement, and a corresponding adjustment to
the provision over the remaining vesting period.

2.23 Income taxes and deferred taxation
Income taxes
Income taxes comprise all current and deferred income taxes, including thewithholding tax payable on profit distributions within the Group. Income
taxes are recognised in the consolidated income statement except forincome taxes on transactions that are recognised directly in shareholders’equity.
Deferred taxation
Deferred income tax is provided is full, using the liability method, on temporary differences arising between the tax base of assets and liabilities andtheir carrying amounts in the financial statements. The principal temporary
differences arise from trade receivables, inventories, depreciation on tangible
assets and tax losses carried forward. Deferred taxes are determined using
tax rates that apply, or have been announced, on the balance sheet date in
the countries where the Group is active. Tax losses carried forward arerecognised as deferred tax assets to the extent that it is probable that tax
profit will be available in the future against which the tax losses carried forward can be utilised. Deferred tax assets and liabilities are offset against
each other if the corresponding income taxes arise by the same tax authority and a legally enforceable right for offsetting exists.

Onerous contracts
The Group presently sees no need for provisions for onerous contracts.
Restructuring
The Group presently has no need for provisions for restructuring.
Contingent liabilities
Contingent liabilities arise from conditions or situations where the outcome
depends on future events. As the probability either cannot be measured reliably or the probability for a subsequent outflow lies below 50%, contingent
liabilities are not recognised in the balance sheet but are described in thenotes.
2.20 Share capital
LEM Holding SA has only ordinary registered shares. Dividends on ordinary
shares are recognised in equity in the period in which they are declared.
When LEM Holding SA or its subsidiaries purchase its own shares, the consideration paid including any attributable transaction costs and taxes isdeducted from shareholders’ equity as treasury shares (own shares) until
they are cancelled. Where such shares are subsequently sold or reissued,
any consideration received is included in shareholders’ equity.

33

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

Segment information
Primary reporting format – by business segment
TCHF
Industrial

Automotive

LEM Group

07/08

06/07

07/08

06/07

07/08

06/07

182’788
35’49931’796163’296
29’17525’68420’245(713)(1’498)21’259523(127)

203’033
34’78630’298(1’413)(7’193)
21’692

184’555
29’69825’557(712)(9’225)15’620Depreciation and amortisation:
Tangible assets
Intangible assets

3’391
314

3’228
264

756
29

625
25

4’147
343

3’852
290

Total

3’705

3’492

785

650

4’490

4’141

Significant non cash items
Provision for share based payments

5’412

0

738

0

6’150

0

Balance sheet
Segment assets
Unallocated assets

79’03976’972

9’249

10’36188’28826’30487’33320’833

Total assets

79’03976’972

9’249

10’361114’592

108’166

Segment liabilities
Unallocated liabilities

34’20926’321

2’022

2’849

36’231
8’245

29’170
14’116

Total liabilities

34’20926’321

2’022

2’849

44’47643’286

Capital expenditure:
Tangible assets
Intangible assets

3’269
440

5’142
238

2’749
23

1’418
21

6’018
463

6’560
259

Total

3’709

5’380

2’772

1’438

6’481

6’819

Income Statement
Sales
EBITDAEBIT
Net financial expense
Taxes
Net earnings

Secondary reporting format – by geographical segment
TCHF
EuropeNorth America

Asia

Rest of the WorldLEM Group

07/08

06/07

07/08

06/07

07/08

06/07

07/08

06/07

Sales by location of customers

107’736

91’97437’42139’49153’367

49’638

4’509

3’452 203’033 184’555

Segment assets
by location of assets
Unallocated assets

52’63954’146

5’967

7’371

29’68225’81688’28826’304

Total assets

52’63954’146

5’967

7’371

29’68225’816114’592 108’166

Capital expenditure
Tangible assets
Intangible assets

4’664
456

5’405
259

25

25

1’329
7

1’130
0

6’018
463

6’560
259

Total

5’120

5’664

25

25

1’336

1’130

6’481

6’819

34

07/08

06/07

87’33320’833NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

1. Trade debtors and other debtors

31.03.08

31.03.07

TCHF

TCHF

Trade debtors, third party
Allowance for collectively impaired bad debt

37’132(1’928)35’234(1’602)

Total trade debtors
Other non-trade debtors

35’204
5’965

33’632
5’094

Total trade debtors and other debtors

41’16938’726

Movements on allowance for bad debt

2007/08

2006/07

TCHF

TCHF

1 April 2006 / 2007
Additions charged to P&L
Amounts written off
Translation effects

1’602
405
(15)
(64)

838
1’200
(424)
(12)

31 March 2007 / 2008

1’928

1’602

Not overdue< 30 days

31– 90 days

91–180 days

> 180 days

Total

TCHF

TCHF

TCHF

TCHF

TCHF

TCHF

Aging analysis of trade andother receivables
31 March 2008
Trade debtors, third party
Allowance for impaired bad debt
Other non-trade debtors

20’010
0
4’863

8’900
935

5’791
(178)
113

663
(186)
11

1’768
(1’564)43

37’132(1’928)
5’965

Total

24’873

9’835

5’726

488

247

41’16923’267

7’014

4’187

640

3’306
(225)
80

345
(173)
7

1’302
(1’204)180

35’234(1’602)
5’094

27’454

7’654

3’161

179

278

38’72631 March 2007
Trade debtors, third party
Allowance for impaired bad debt
Other non-trade debtors
Total

2. Other current assets

31.03.08

31.03.07

TCHF

TCHF

Advances to suppliers
Prepayments and accrued income
Derivative financial instruments

817
1’013
221

614
1’467
59

Total

2’051

2’140

31.03.08

31.03.07

TCHF

TCHF

Raw materialWork in progress
Finished goods and goods for resale

10’8132’463
9’135

14’150
2’710
8’222

Total

22’41125’082For further information on derivative financial instruments, see note 22.

3. Inventories

Above total inventories include provisions for slow moving items of TCHF 1’760 (2006/07 TCHF 1’932).

35

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

4. Property, plant and equipment
In TCHF

Land & Buildings

Machinery andEquipment

Total

Net book value on 1 April 2007
Conversion differences
Increases
Decreases
Depreciation charge

325
(10)
6
0
(11)

16’742
(388)
6’012
(90)
(4’136)17’067
(398)
6’018
(90)
(4’147)

Net book value on 31 March 2008

310

18’14018’450On 31 March 2008
Cost
Depreciation

405
(95)

50’673(32’533)

51’078(32’628)

Net book value on 31 March 2008

310

18’14018’450Net book value on 1 April 2006
Conversion differences
Increases
Decreases
Depreciation charge

526
(38)
152
(309)
(6)

14’499
(129)
6’408
(190)
(3’846)15’025
(167)
6’560
(499)
(3’852)Net book value on 31 March 2007

325

16’742

17’067

On 31 March 2007
Cost
Depreciation

411
(86)

47’624(30’882)

48’035(30’968)

Net book value on 31 March 2007

325

16’742

17’067

Goodwill

Other intangible
AssetsTotal

Net book value on 1 April 2007
Conversion differences
Increases
Decreases
Amortisation charge

3’469
(50)
0
0
0

908
(9)
463
(9)
(343)

4’377
(59)
463
(9)
(343)

Net book value on 31 March 2008

3’419

1’010

4’429

On 31 March 2008
Cost
Amortisation

3’419
0

3’121
(2’111)6’540(2’111)

Net book value on 31 March 2008

3’419

1’010

4’429

Net book value on 1 April 2006
Conversion differences
Increases
Decreases
Amortisation charge

3’601
(132)
0
0
0

983
(29)
259
(16)
(289)

4’584
(161)
259
(16)
(289)

Net book value on 31 March 2007

3’469

908

4’377

On 31 March 2007
Cost
Amortisation

3’469
0

2’688
(1’780)

6’157(1’780)Net book value on 31 March 2007

3’469

908

4’377

5. Intangible assets
In TCHF

36

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

The entire goodwill of the LEM Group is from the acquisition of NANA in 2000/01 and is allocated to the cash generating legal unit
LEM Japan KK.
The goodwill relates to the business segment Industrial. The recoverable amount has been determined based on value in use
calculations. These calculations use cash flow projections of 5 years based on financial business plans and budgets approved bymanagement. The basis of the key assumptions is market growth of 2% for both the five years and beyond. Operating costs are
based on past performance. The discount rate applied to cash flow projections is pre-tax and reflects specific risks relating to LEM
and was determined at 8.0%.
No impairment loss resulted from the impairment test of goodwill.

6. Trade and other payables

31.03.08

31.03.07

TCHF

TCHF

Trade accounts payables, third party
Other accounts payables

15’8191’215

14’446
1’886

Total

17’03416’332< 60 days

61–180 days

> 180 days

Total

TCHF

TCHF

TCHF

TCHF

Ageing analysis of Trade and other payables
31 March 2008
Trade accounts payables, third party
Other accounts payables

15’006
1’156

608
10

205
49

15’819
1’215

Total

16’162

618

254

17’03431 March 2007
Trade accounts payables, third party
Other accounts payables

14’055
1’749

119
2

272
135

14’446
1’886

Total

15’804121407

16’33231.03.08

31.03.07

TCHF

TCHF

Advances from customers
Derivative financial instruments

650
0

345
0

Total

650

345

31.03.08

31.03.07

TCHF

TCHF

43’032
4’021
15’11423’89740’736
4’063
13’083
23’5907. Other short-term liabilities

8. Operating leases
Total future minimal lease payments
Less than 1 year
Between 1 and 5 years
Beyond 5 years

In 2007/08 the lease expense was TCHF 3’907 (2006/07 TCHF 4’022). Lease agreements exist for the business premises used by
the Group companies, the agreements are classified as operating leases. The terms of contract range between 1 and 15 years.

37

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

9. Provisions

Employee andtermination benefits

Claimsand litigations

Stock option
plans

Total

TCHF

TCHF

TCHF

TCHF

Balance on 1 April 2007
Additional provisions
Unused amounts reversed
Utilized during the year
Reclassification from Equity
Conversion differences
Balance on 31 March 2008
Of which short-term
Of which long-term

1’564
1’024
(508)
(389)
0
(35)
1’656

1’339
536
(105)
(753)
0
(12)
1’005

0
5’332
0
0
818
0
6’150

2’904
6’892
(613)
(1’142)
818
(47)
8’811
3’416
5’395

Balance on 1 April 2006
Additional provisions
Unused amounts reversed
Utilized during the year
Conversion differences
Balance on 31 March 2007
Of which short-term
Of which long-term

1’402
549
(163)
(190)
(33)
1’564

1’885
1’655
(1’043)(1’134)
(23)
1’339

0
0
0
0
0
0

3’287
2’204
(1’206)(1’324)
(56)
2’904
983
1’921

Employee and termination benefits
Provisions for employee and termination benefits include termination benefits required in specific countries as well as pension obligations.
Claims and litigations
Provisions for claims and litigations cover warranty claims expected to be made in the future that are not covered by insurance. The
provisions have been estimated based on historical experience and based on management’s risk assessment. Included are also
provisions for non-product related risks in some countries.
Stock option plans
See accounting policies 2.19 “Provisions and contingent liabilities”.
The timing of the cash outflows are not contractually fixed and therefore uncertain, an estimation has been made concerning longterm and short-term provisions.

10. Equity
Share capital
There is no authorised or conditional share capital outstanding. The nominal share capital of TCHF 575 comprises of 1’150’000
registered shares each with a nominal value of CHF 0.50. Treasury shares are not entitled to dividends.
50’000 shares were cancelled as of 27 September 2007, following approval by the shareholders at the ordinary shareholders’meeting from 27 June 2007.
Number of shares
Movement of treasury shares
Balance on 1 April 2007
Movement
Balance on 31 March 2008
Ordinary dividend per share (in CHF)
Extraordinary dividend per share (in CHF)

50’000(50’000)
0
7.00
4.00

Average price

Total

CHF

TCHF

156
(156)

7’820
(7’820)
0

0
156
156

0
7’820
7’820

The dividend is proposed by the non-executive Board of Directors to be paid 2008.
Balance on 1 April 2006
Movement
Balance on 31 March 2007
Ordinary dividend per share (in CHF)

38

0
50’00050’000
4.50

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

11. Minority Interests

31.03.08

31.03.07

TCHF

TCHF

201

178

There were no changes in minority interests in the current financial year. The minority interests correspond to 10% in TVELEM heldby local management.

12. Staff cost

2007/08

2006/07

TCHF

TCHF

Salaries and wages
Other personnel costs
Temporary employees costs
Expenses for stock option plans(35’037)(11’303)(4’037)(5’332)(33’363)(11’938)(6’301)
(981)

Total

(55’709)(52’583)

Employee benefit plan costs comprise defined-contribution contributions of TCHF 436 (PY TCHF 444). For more information on
expenses for stock option plans see Accounting policies 2.19 “Provisions and contingent liabilities”.
31.03.08

31.03.07

FTE

FTE

Number of employees at the end of the financial year
Full time employees
Temporary employees
Apprentices

924
61
11

801
76
11

Total

996

888

2007/08

2006/07

TCHF

TCHF

Financial expenses
Interest expenses

(143)
(822)

(127)
(956)

Total

(965)

(1’083)

2007/08

2006/07

TCHF

TCHF

Interest income

287

294

Total

287

294

2007/08

2006/07

TCHF

TCHF

Exchange gains and losses
Fair value revaluation on derivatives – currency
Gains and losses on derivatives – currency1

(830)
16
79

126
18
(67)

Total

(735)

77

13. Financial expense

14. Financial income

15. Exchange effect1

position includes cost of derivative hedging

39

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

16. Income taxes

2007/08

2006/07

TCHF

TCHF

Amounts charged (credited) in the income statement are as follows:
Current income taxes
Deferred income taxes(6’723)(470)(7’983)(1’242)

Total income tax expenses(7’193)(9’225)Since the Group operates globally, it is liable for income taxes in many different tax juridisctions. Judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Differences between the final tax outcome and the amounts that were initially recorded
impact the income and deferred taxes in the period in which such determinations are made.
The Group calculates its expected average tax rate as a weighted average of the tax rates in the tax jurisdictions in which the Group
operates. The Group’s effective tax rate differs from the Group’s average expected tax rate as follows:
2007/08

2006/07

Group’s average expected tax rate
Tax effect of– expenses not deductible– reduced taxes– adjustment in respect of income tax of previous periods– consideration of tax losses carried forward

28.22%

37.30%

0.11%(1.40%)(1.90%)(0.13%)

0.50%(0.40%)
0.00%(0.30%)

Group’s effective tax rate

24.90%

37.10%The decrease in the Group’s average expected tax rate is caused by changes in volumes, product mix and profitability of the Group’s
subsidiaries in the various jurisdictions, the change in applicable statutory tax rate in Germany and the creation of LEM International
for the trading flows.
The Group’s low effective tax rate in 2007/08 was due to a tax return and the release of a tax provision following the closing of atax investigation. Deferred income tax liabilities have not been established for withholding and other taxes that would be payable on
the unremitted earnings of certain foreign subsidiaries, as such amounts are currently regarded as permanently reinvested.
31.03.08

31.03.07

TCHF

TCHF

(677)
(337)
(478)
138
(866)
(182)
(684)
328
(83)
411

(684)
(102)
(716)
134
(666)
(95)
(571)
646
498
148

Total

(1’215)(704)

The balance sheet contains the following:
Deferred tax assets
Deferred tax liabilities
Net assets

165(1’380)(1’215)903(1’607)(704)

Deferred tax assets and liabilities
Current assets– trade debtors– inventory– others
Non-current assets– property, plant and equipment– intangible assets
Liabilities– trade and other payables– others

Deferred taxes credited to equity amounted in 2007/08 to TCHF 0 (2006/07 TCHF 0).

40

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

31.03.08

31.03.07

TCHF

TCHF

The amount of unused tax losses not recognized in the balance sheet
Expiration in the next 10 years
Expiration 2020
Without date of expiration

0
0
961

124
2
255

Total

961

381

17. Earnings per share

2007/08

2006/07

Basic earnings per share
Net earnings for the year (TCHF)

21’60915’5411’200’000
25’0001’175’000

1’200’000
33’133
1’166’867

18.39

13.32

Tax losses not recognised in the balance sheet have been used in LEM Holding Inc. in 2007/08.

Ordinary number of shares at the beginning of the year
Weighted average number of treasury shares
Weighted average number of shares outstanding
Earnings per share – basic (CHF)

Diluted earnings per share
Since the accounting treatment of the outstanding employee stock option plans has been changed from equity settled to cash
settled as of 31 December 2007, there is currently no dilutive effect. There is no authorized or conditional capital outstanding.
Net earnings for the year (TCHF)
Weighted average number of shares outstanding
Executive stock option plans
Adjusted weighted average number of shares outstanding
Earnings per share – diluted (CHF)

21’60915’541

1’175’000
0
1’175’000

1’166’867
38’2491’205’116

18.39

12.90

41

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

18. Related parties
Related parties are the non-executive Board of Directors and the Senior managers as defined in the Corporate Governance guidelines. The compensation to the non-executive Board of Directors comprises the following components: Base salary and stock
options. The compensation to the Senior manager comprises the following components: Base salary, bonus, post employment
benefits and stock options. The base salary is the employees compensation before deduction of employees social security contributions. The bonus is paid in cash.
2007/08

2006/07

TCHF

TCHF

Compensation of the non-executive Board of Directors
Base salary
Expenses for stock option plans

(427)
(378)

(302)
(118)

Total
Number of granted Stock options in financial year

(805)
3’939

(420)
4’250

2007/08

2006/07

TCHF

TCHF

Compensation of the Senior management
Base salary
Bonus
Post employment benefits
Expenses for stock option plans(1’305)(455)(152)(2’675)(1’164)
(302)
(137)
(438)

Total
Number of granted Stock options in financial year

(4’587)
10’500(2’041)11’500For more information on expenses for stock option plans see Accounting policies 2.19 “Provisions and contingent liabilities”.
Additional fees and compensations
No member of the Board of Directors received fees, whose value was greater than half of his normal compensation (2006/07
TCHF 0).

19. Stock option plans
2007/08

SOP 3
SOP 4
SOP 5
SOP 6

2006/07

SOP 3
SOP 4
SOP 5

42

Grant
Date

Quantity
options
outstanding
1.4.2007

Quantity
optionsissuedQuantity
options
cancelled

Quantity
options
exercised

Quantity
options
outstanding
31.3.2008

Exercise
pricein CHF

Fair
value
in CHF

Exerciseperiodfrom

Exerciseperioduntil

31.03.05
01.04.05
01.04.06
01.04.07

2’628
36’80929’750000026’820

0
0
0
(938)

(2’628)(21’984)000
14’82529’75025’88277.18
77.18
139.80240.52

24.86
24.86
47.69
64.92

01.04.07
01.04.07
01.04.09
01.04.10

31.03.15
31.03.15
31.03.11
31.03.12

Total

69’187

26’820(938)(24’612)70’457

Grant
Date

Quantity
options
outstanding
1.4.2006

Quantity
optionsissuedQuantity
options
cancelled

Quantity
options
exercised

Quantity
options
outstanding
31.3.2007

Exercise
pricein CHF

Fair
value
in CHF

Exerciseperiodfrom

Exerciseperioduntil

31.03.05
01.04.05
01.04.06

2’628
38’25200963
31’00000(1’250)0(2’406)0

2’628
36’80929’75077.18
77.18
139.80

24.86
24.86
47.69

01.04.07
01.04.07
01.04.09

31.03.15
31.03.15
31.03.11

Total

40’88031’963(1’250)(2’406)69’187

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

SOP 3+4
The Board of Directors issued the stock option plan SOP 3+4 for the management team and the non-executive Board of Directors
in March/April 2005. The plan was equity settled but has been changed to cash settled as of 31 December 2007 (see below). Eachplan gives the right to cash the countervalue of one share at the predetermined exercise price, which corresponds to the average
share price of the fourth quarter 2004/05. The number of stock options granted depends on the performance of the LEM shareprice compared to the SWX Index for Small and Mid Cap Companies in Switzerland for the financial year 2004/05. The vesting
period is two years. The details of the contractual terms of the otion plan can be seen in the table above.
During the financial year 2007/08 24’612 options were exercised. 14’825 shares related to SOP 4 are currently still exercisable. The
average share price for the exercised options was CHF 299.5.
SOP 5
The Board of Directors issued the stock option plan SOP 5 for the management team and the non-executive Board of Directors in
April 2006. The plan was equity settled but has been changed to cash settled 31 December 2007 (see below). Each plan gives theright to cash the countervalue of one share at the predetermined exercise price, which corresponds to the average share price ofthe fourth quarter 2005/06. The number of stock options granted depends on the performance of the LEM share price comparedto the SWX Index for Small and Mid Cap Companies in Switzerland for the financial year 2005/06. The vesting period is three years.
The details of the contractual terms of the option plan can be seen in the table above.
SOP 6
The Board of Directors issued the stock option plan SOP 6 for the management team and the non-executive Board of Directors in
April 2007. The plan was equity settled but has been changed to cash settled 31 December 2007 (see below). Each plan gives theright to cash the countervalue of one share at the predetermined exercise price, which corresponds to the average share price ofthe fourth quarter 2006/07. The number of stock options granted depends on the performance of the LEM share price comparedto the SWX Index for Small and Mid Cap Companies in Switzerland for the financial year 2006/07. The vesting period is three years.
The details of the contractual terms of the option plan can be seen in the table above.
The Board of Directors decided to modify, as of 31 December 2007, the conditions of the stock options issued and not exercisedfrom equity settled to cash settled. Based on the share price at the end of each quarter the fair value based on the “Hull-White”
model is recalculated by a third party actuary. This fair value is the basis for the adjustment of the provision. The calculation with the“Hull-White” model uses the following parameters:– expected volatility (based on historical volatility)– risk free interest rate
– dividend yield

SOP 6

SOP 5

SOP 3/4

28.98%
2.5090%2.90%

39.11%
2.5050%2.35%

36.24%
2.5375%2.35%

Due to the share split in September 2005, the number of options under all previous stock option programs was adjusted by thefactor of 4.8135.
Looking forward, the Board of Directors attempts to introduce a performance share plan (PSP) which will follow up the stock option
plans. The participants will be granted shares with a three year vesting period. At exercise they will receive shares between zero ora multiple of two, depending on the value added created in the three years.
More details on the stock option programs can be found in the Corporate Governance section of the Annual Report.

43

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

20. Retirement benefit obligations
The Group considers its Swiss pension fund a defined benefit plan. The Group sponsors this defined benefit plan in Switzerland,
which provides benefits primarily based on years of service and level of compensation in accordance with local regulations and practices. The following tables provide a reconciliation of the changes in the net benefit obligation as of 31 December 2007.
Net benefit expense
The components of net pension expense for the defined benefit plan are included in the profit & loss account according to theirservice lines and as follows:
31.03.08

31.03.07

TCHF

TCHF

Current service cost
Interest cost
Expected return on plan assets
Employee contributions

2’625
812
(1’224)(1’199)

2’576
852(1’143)(985)

Net benefit expense

1’014

1’300

Changes in defined benefit obligation
Defined benefit obligation 1.04.2007
Interest cost
Current service cost
Benefits paid
Actuarial (gains)/losses on obligation

27’066812
2’625(2’674)(989)

Defined benefit obligation 31.3.2008

26’840Defined benefit obligation 1.4.2006
Interest cost
Current service cost
Benefits paid
Actuarial (gains)/losses on obligation

24’332852
2’576(1’480)786

Defined benefit obligation 31.3.2007

27’066

Changes in the fair value of plan assets
Fair value of plan assets at 1.4.2007
Expected return
Contribution by employer and employee
Benefit paid
Actuarial gains/(losses) on plan asset

27’2021’224
2’802(2’674)(1’304)

Fair value of plan assets at 31.3.2008

27’250Fair value of plan assets at 1.4.2006
Expected return
Contribution by employer and employee
Benefit paid
Actuarial gains/(losses) on plan asset

25’404
1’143
2’304(1’480)(169)

Fair value of plan assets at 31.3.2007

27’202

LEM expects to contribute TCHF 1’625 to its defined benefit plan in 2007/08 (2006/07 TCHF 1’600).

44

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

Present value of funded obligations
Fair value of plan assets
Funded status
Unrecognized net actuarial losses
Unrecognized asset due to limit in IAS19§58A lit b)
Net liabilities / assets (–)

31.03.08

31.03.07

TCHF

TCHF

26’840(27’250)(410)(1’271)
1’681

27’066(27’202)
(136)
(956)
1’092

0

0

Actual return on plan assets for 2007/08 was TCHF – 81 (2006/07 TCHF 732)
31.03.08

31.03.07

31.03.06

31.03.05

TCHF

TCHF

TCHF

TCHF

Amounts in the current and previous two periods
Plan assets
Defined benefit obligations

27’25026’84027’20227’06625’40424’332

22’391
23’335Funded status
Actuarial gains/(losses) on plan asset
Experience adjustment (gains)/losses on obligation

410(1’304)(1’300)

136
(170)
786

1’072
(407)
2’413

(944)

Strategic pension plan allocations are determined by the objective to achieve an investment return which, together with the contribution paid, is sufficient to maintain reasonable control over the various funding risks of the plans. Estimated returns on assets are
determined based on the asset allocation and is reviewed periodically. A temporary deviation from policy targets is allowed.
Major categories of plan assets as a percentage of the fair value of total plan assets

Equity securities
Debt securities
Real estate
Cash and other investments

Long-term target%

2007/08%

2006/07
%

40.0%
50.0%
5.0%
5.0%

31.0%
57.0%
4.0%
8.0%

32.1%
60.4%
0.0%
7.5%

100.0%

100.0%

100.0%

2007/08

2006/07

3.50%
1.50%
0%

3.00%
1.50%
0%

6.50%
3.50%
2.50%

6.50%
3.50%
2.50%

The principal assumptions used in determining the pension benefit obligation are as follows:

Discount rate
Salary increases
Pension increases
Expected return on plan assets– Equities– Bonds– Other assets
Costs related to the pension plan were charged to the different functional departments.

45

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

21. Contingent liabilities

2007/08

2006/07

TCHF

TCHF

Total guarantees for credits of subsidiaries
Total guarantees to third parties

1’742
1’846

4’178
1’525

Total off balance sheet liabilities

3’588

5’703

On 31 March 2008 the Group had contingent liabilities in respect of bank and other guarantees and other matters arising in theordinary course of business from which it is anticipated that no material liabilities will arise. A new guarantee was given to the building consortium in China for the construction of a new plant in China. The operations of earnings of the Group continue, from time
to time and in varying degrees, to be affected by political, legislative, fiscal and regulatory environments, inlcuding those relating toenvironmental protection, in the countries in which it operates. The industry in which the Group operates is also subject to risks ofvarious kinds. The nature and frequency of these developments and events, not all of which are covered by insurance, as well as
their effect on future operations and earnings are not predictable.

22. Financial risk management objectives and policies
The Group’s principal financial liabilities, other than derivatives, comprise bank loans, accrued expenses, current income tax
payable, provisions and trade payables. The main purpose of these financial liabilities is to raise cash for the Group’s operations.
The Group has various financial assets such as cash and short-term deposits, which arise directly from its operations.
The Group also enters into derivative transactions such as currency risk reversal contracts to hedge the USD and EUR risk. The
purpose is to manage the currency risks arising from the Group’s operations. It is the Group’s policy that no derivatives for trading
purposes shall be undertaken.
The main risks arising from Group’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. The
Board of Directors reviews and agrees policies for managing each of these risks which are described below.
Interest rate risk
The Group’s exposure to the risk of changes in market interest rates with the current financial leverage is low. Currently all financial
liabilities are short-term and are kept at variable and fixed interest rates.
Interest rate risk table
The following table demonstrates the sensitivity to a reasonable possible change in interest rates of 100 basis points, with all othervariables held constant, of the Group’s profit before tax. The calculations are based on the Group’s financial liabilities held at eachbalance sheet date. The impact on the Group’s equity is not significant.
Increase / decreasein basis points
Interest bearing liabilities
CHF
USD
JPY

100
100
100

Total
CHF
USD
JPY
Total

46

(100)
(100)
(100)

Effect on profit before tax
2007/08
2006/07
TCHF

TCHF

0
(1)
(1)

(7)
0
(1)

(2)

( 8)

0
1
1

7
0
1

2

8

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency transactions primarily withrespect to the USD, EUR, GBP and JPY. The Group seeks to reduce this risk by optimizing its natural hedging. This means thatcash inflows and outflows in a specific currency should be in balance as far as possible. Derivative financial instruments are enteredinto for specific underlying risks in accordance with the Group’s policy. Currently the Group has at the gross margin level a net exposure in USD and EUR which is up to 50% hedged. It is the Group’s policy to negotiate the terms of the hedge derivatives to matchthe terms of the hedged items, and thereby to maximise the hedge effectiveness.
Currency risks also arise from the translation differences that are not hedged by the Group when preparing the consolidated annual financial statements in CHF. The foreign exchange translation is excluded from the calculation below.
Foreign exchange risk table
The following table demonstrates the sensitivity to a 5% change in the USD, EUR, GBP and JPY with all other variables held
constant of the Group’s profit before tax (due to the changes in the fair value of the monetary assets and liabilities) and the Group’s
equity. The sensitivity analysis is based on the Group’s financial instruments held in each currency at each balance sheet date. Since
the hedging instruments in place covered the period starting in April 2008, it has not been taken into consideration to reduce thecurrency exposure in the table shown below.
Increase/ decreasein currency rate

USD
EUR
JPY
GBP

+ 5%
+ 5%
+ 5%
+ 5%

Total
USD
EUR
JPY
GBP
Total

(5%)
(5%)
(5%)
(5%)

Effect on profit before tax
2007/08
2006/07
TCHF

TCHF

494
828
(40)
27

326
731
24
66

1’309

1’147

( 494)
(828)
40
(27)

(326)
(731)
(24)
(66)

(1’309)(1’147)

Credit risk
The Group trades with recognised, creditworthy parties, the trade debtors balances are monitored on an ongoing basis. It’s theGroup’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In case of a deterioration of the credit history, advance payments are required. The Group’s exposure to bad debts is not significant, the maximum
exposure is the carrying amount as disclosed in note 1. There are no significant concentrations of risk within the Group.
With respect to credit risk arising from the other financial assets of the Group, which comprises cash and cash equivalents, othercurrent assets and certain derivative instruments, the Group’s exposure to credit risks arises from default of the counterparty, witha maximum exposure equal to the carrying amount of these positions.
Liquidity risk
The Group monitors its risk to a shortage of funds using a monthly treasury forecast. The forecast considers the maturity of bothits financial investments and financial assets (e.g., trade debtors and other financial assets) and projected cash flows from operations. Capital requirements by subsidiaries are managed centrally by corporate finance. In case bank financial liabilities are required
this is either done centrally and passed on as an intercompany loan, or given directly by the bank to the subsidiary with a reductionof the Group’s total credit line. The total leverage of the Group is low, the financial liabilities mature in less than one year based on
the carrying value of borrowings reflected in the financial statements.
Financial instruments: Interest bearing financial liabilities and derivative financial instruments
Set out below is a comparison by category of carrying amounts and maturity profile and fair values of the Group’s financial liabilities.

47

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

EntityCurrency

Financial liabilities
LEM Holding SA
Beijing LEM Electronics Co. Ltd
LEM Japan KK
LEM Japan KK

TCHF
TUSD
TJPY
TJPY

Nominalamount0
1’000
0100’000

Fixed /
variable

var
fixed
fixed

Interest
rate

6.35%
1.25%
1.61%

Maturity Net carrying Net carrying
amountamount31.03.08
31.03.07

30.05.08
30.03.08
31.03.08

Total
Of which short-term
Of which long-term

TCHF

TCHF

0
1’087
0
1’000

7’000
0
573
0

2’087
2’087
0

7’573
7’556
17

On 2006/07, LEM has renegotiated credit lines with four Swiss Banks. The uncommitted credit lines have a maximum amount of
CHF 70 million. The interest rate is composed of the relevant LIBOR for the respective interest period and an interest margin that is
linked to the debt factor. The credit lines are subject to fulfilment of periodically calculated financial performance indicators(covenants). At 31 March 2008, all covenants were attained.
For the variable-interest and fixed-interest loans the fair value equals approximately the carrying amount. The effective interest rateof the Loan in LEM Japan and Bejing LEM approximates the stated interest rate.
Maturity profile of derivative financial instruments and interest bearing financial liabilities
Contract value becomes due as follows:
Contract
Carrying
Fair
31 March 2008
valuesamountvaluesFinancial liabilities
Short-term financial liabilities
Derivative financial liabilities
Long-term financial liabilities

Less than
3 months

3 to 12months

Total

TCHF

TCHF

TCHF

TCHF

TCHF

TCHF

2’087
0
0

2’087
0
0

2’087
0
0

2’087
0
0

0
0
0

2’087
0
0

2’087

2’087

2’087

0

2’087

Contract
valuesCarrying
amountFairvaluesLess than
3 months

3 to 12months

Total

TCHF

TCHF

TCHF

TCHF

TCHF

TCHF

7’556
0
17

7’556
0
17

7’556
0
17

7’556
0
0

0
0
17

7’556
0
17

7’573

7’573

7’556

17

7’573

Total
Contract value becomes due as follows:
31 March 2007
Financial liabilities
Short-term financial liabilities
Derivative financial liabilities
Long-term financial liabilities
Total

48

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

Derivative financial assets 31 March 2008: In order to hedge the EUR risk, LEM entered into a EUR/CHF risk reversal. A risk reversal
is defined as a combination of buying a EUR put at the lower end and selling a EUR call at the upper end. This gives LEM a hedge
at the lower end and gives the opportunity to profit until the EUR/CHF reaches the upper end. At year end, there was one hedging
transaction open. The collar option has 6 monthly expiry dates with a TEUR 500 countervalue, starting 18 April 2008. The hedged
items are projected cash inflows of TEUR 500 per month. LEM has put the documentation in place in order to apply cash flow hedge
accounting. In accordance with IAS 39.74a, the intrinsic value of the option structure can be designated as being the efficient partof the hedge. The variation of the intrinsic value of the hedging structure will impact the equity. The time value of the hedging structure will impact the P&L account. At the year end, the effective part of the hedge, the intrinsic value of TCHF 146 was recognisedin equity, the ineffective part, the time value of TCHF 72, was recognised in the Income statement. The fair value calculation is doneusing the Black&Scholes model.
Capital management
The primary objective of the Group’s Capital management is to ensure that it maintains a healthy and stable equity ratio in order tosecure the confidence of investors, creditors and other market players and strengthen the future development of its business activities. The Group manages its capital structure and makes adjustments to it, in light of changes in the economic conditions. The
Board of Directors strives to achieve a pay-out ratio between 25 – 50%. However, it may diverge from this policy on the grounds of
economic prospects at any time or on the grounds of planned future investment activities. No changes were made in the objectives, policies or processes during the last two years.

23. Scope of consolidation
Full consolidation
EuropeLEM Belgium sprl-bvba
LEM Deutschland GmbHLEM France Sàrl
LEM Holding SA
LEM International SA
LEM Italia Srl
LEM SALEM UK Ltd
TVELEM Ltd

Country

Currency

Share Capital

Participation

Belgium
Germany
FranceSwitzerland
Switzerland
Italy
Switzerland
Great Britain
Russia

EUR
EUR
EUR
CHF
CHF
EUR
CHF
GBP
RUB

60’00075’000240’000
575’000
100’000
25’0008’500’000
2
200’000

100%
100%
100%
100%
100%
100%
100%
100%
90%

USA
USA

USD
USD

50
150’000

100%
100%

China
Malaysia
Japan

CNY
MYR
JPY

32’092’000
50’000
16’000’000

100%
100%
100%

North America
LEM Holding Inc.
LEM USA Inc.
Asia
Beijing LEM Electronics Co. Ltd
LEM Malaysia Sdn Bhd
LEM Japan KK

Comments

In liquidation

LEM International SA was created as of 3 April 2007 with a share capital of TCHF 100. As of September 2007, a capital reduction
has been performed in LEM Holding reducing the share capital from TCHF 600’000 to TCHF 575’000. During the year an investment in kind in Bejing LEM Electronics Co. Ltd was contributed and retained earnings transfered into equity (share capital 31.3.2007
CNY 20’211’273).

24. Events after the balance sheet date
There were no events subsequent to the balance sheet day that require adjustment to or disclosure in the financial statements.

49

GROUP AUDITOR’S REPORT

Report of the group auditors
to the ordinary shareholders meetingof LEM Holding SA
As group auditors, we have audited the consolidated financial
statements (balance sheet, income statement, cash flow statement, statement of changes in equity and notes) on pages 25
to 49 of LEM Holding SA for the year ended 31 March 2008.
These consolidated financial statements are the responsibilityof the Board of Directors. Our responsibility is to express an
opinion on these consolidated financial statements based on
our audit. We confirm that we meet the legal requirements
concerning professional qualification and independence.
Our audit was conducted in accordance with Swiss AuditingStandards and International Standards on Auditing (ISA),
which require that an audit be planned and performed toobtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement. We
have examined on a test basis evidence supporting theamounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used,significant estimates made and the overall presentation of theconsolidated financial statements. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements give atrue and fair view of the financial position, the results of operations and the cash flows in accordance with International
Financial Reporting Standards (IFRS) and comply with Swisslaw.
We recommend that the financial statements submitted to you
be approved.
Geneva, 19 May 2008
Ernst & Young Ltd
Hans Isler(in charge of the audit)
Fredi Widmann

50LEM HOLDING SA
Statutory Accounts

BALANCE SHEET OF LEM HOLDING SA
ON 31 MARCH (before distribution of earnings)

Assets31.03.08

31.03.07

TCHF

TCHF

6’653
0
392
25’056

617
7’820
347
3’799

32’101

12’58349’331
17

48’67936

Total non-current assets

49’34848’715

Total assets

81’44961’29831.03.08

31.03.07

TCHF

TCHF

0
1’097
27’709

7’000
802
1’398

Total short-term liabilities

28’806

9’200

Long-term liabilities
Other long-term liabilities

6’770

620

Total short-term liabilities

6’770

620

575
29’671
0
8’218
7’409

600
29’665
7’820
2’619
10’774

Total equity

45’87351’478

Total liabilities & equity

81’44961’298Current assets
Cash
Own shares
Other current assets
Group current assets

Notes

1
4

Total current assets
Non-current assets
Investments in subsidiaries
Intangible assets

Liabilities & Equity
Short-term liabilities
Short-term financial liabilities
Other short-term liabilities
Group short-term liabilities

EquityShare capital
General reserve
Reserve for own shares
Retained earnings
Net earnings of the period

52

3

Notes

4

1
1

INCOME STATEMENT OF
LEM HOLDING SA

Income2007/08

2006/07

TCHF

TCHF

Dividends
Interest income on inter-company loans
Other financial income
Central services to the Group
Foreign exchange gains

6’471
34
430
2’861
1’972

10’237
83
83
2’999
454

Total income

11’76813’855

Expenses

2007/08

2006/07

TCHF

TCHF

(3’089)
(753)
(137)

(2’362)
(428)
(110)

Total expenses(3’979)(2’899)Profit before taxes
Taxes

7’789
(380)

10’956(182)

Net earnings

7’409

10’774

Office, administration and personnel expenses
Financial expenses
Foreign exchange losses

553

STATEMENT OF EQUITY OF
LEM HOLDING SA

SharecapitalGeneralstatutory
reserves

Reserves
for Treasury
sharesRetainedearnings

Total

30’00031’532

2’689

3’705

2’689
3’264

(2’689)10’63867’9260(29’400)
0
3’264
10’638

TCHF
Balance on 1 April 2005
Dividends
Capital reduction
Reserves for treasury shares
OthersProfit for the year

(29’400)

Balance on 31 March 2006

600

37’4850

14’34452’429Balance on 1 April 2006
Dividends
Reserves for treasury shares
OthersProfit for the year600

37’4850

14’344(11’725)(7’820)

7’820
10’77452’429(11’725)00
10’774

Balance on 31 March 2007600

29’665

7’820

13’39351’478

Balance on 1 April 2007
Dividends
Capital reduction
Reserves for treasury shares
OthersProfit for the year600

29’665

7’820

13’393(5’175)

Balance on 31 March 2008575

51’478(5’175)(25)(7’820)67’409
045’87354(25)(7’820)6

29’67107’409
015’627

NOTES TO THE FINANCIAL STATEMENTS OF
LEM HOLDING SA

Principles for the establishment of the financial statements
The financial statements of LEM Holding SA comply with the requirements of the Swiss law for companies, the Code of Obligations (SCO).

Basis and methods of valuation
The current assets and liabilities and the inter-company loans are valuated at the exchange rate of 31 March each year. The foreignexchange gains and losses are recorded in the profit and loss account. The investments in subsidiaries are valued at acquisition
cost, less adjustments for impairment of value.

1. Share capital and treasury shares

Opening capital on 1.4.2007
Closing capital on 31.3.2008

SharesPar value
per share

TCHF

1’200’000
1’150’000

0.50
0.50

600
575

SharesPrice per share

TCHF

Treasury shares LEM Holding AG
Value on 1.4.2007
ChangeValue on 31.3.2008

50’000(50’000)
0

156.40(156.40)
0.00

7’820
(7’820)
0

Value on 1.4.2006
ChangeValue on 31.3.2007

050’00050’0000.00
156.40
0.00

0
7’820
7’820

50’000 shares were cancelled as of 27 September 2007 following approval by the shareholders at the ordinary shareholders’meeting from 27 June 2007. Subsidiaries of LEM Holding SA did not own any shares of LEM Holding SA.

2. Proposal for appropriation of profits
Balance brought forward from previous year
Net income for the year
Total available earnings
Dividends1
Carried forward to new account1

31.03.08

31.03.07

TCHF

TCHF

8’218
7’409

2’619
10’77415’627(12’650)

13’393(5’175)

2’977

8’218

No dividend was paid on own shares held by LEM Holding SA

The Board of Directors proposes the distribution of an ordinary dividend of CHF 7.00 per share, followed by an extraordinary
dividend of CHF 4.00 per share. This results in the following dividends per share:
Cash dividend per share

Gross

Net2

Registered share

11.00

7.15

2

after reduction of 35% withholding tax

55

NOTES TO THE FINANCIAL STATEMENTS OF
LEM HOLDING SA

3. Investments in subsidiaries

31.03.08

31.03.07

TCHF

TCHF

Historical cost

49’331

48’679Total

49’331

48’67931.03.08

31.03.07

TCHF

TCHF

Current inter-company loans
Inter-company current assets

14’676
10’380

1’740
2’059

Total

25’056

3’799

Short-term inter-company liabilities
Inter-company trade payables

26’851
858

0
1’398

Total

27’709

1’398

5. Office, administration and personnel expenses

2007/08

2006/07

TCHF

TCHF

Office and administration expenses
Board member fees
Expenses for stock option plans exercised
Expenses for stock option plans provided(1’203)
(427)
(983)
(476)

(2’060)
(302)
0
0

Total

(3’089)(2’362)

See also note 23 of the consolidated financial statements.

4. Group current assets and liabilities

6. Important shareholders according toart. 663c of the Swiss company law
Shareholder with ownership above 3% (31.3.2008)
and 5% (31.3.2007):
Werner O. Weber
Sarasin Investmentfonds SA
Threadneedle Ltd.
POWE Capital management Ltd.
Erwin Studer
Joraem de Chavonay SA

31.03.08
in %Sharesin %240’000
119’399
115’000
38’40642’00038’000

20.9%
10.4%
10.0%
3.3%
3.7%
3.3%

231’000
115’000
120’600
60’771

19.3%
9.6%
10.1%
5.1%

31.03.08

31.03.07

TCHF

TCHF

12’0187’003

7. Obligations according toart. 663b of the Swiss company law
Guarantees in favour of third parties on behalf of subsidiaries

56

31.03.07

SharesNOTES TO THE FINANCIAL STATEMENTS OF
LEM HOLDING SA

8. Remuneration of Board of Directors and Senior Management
Obligations according to art. 663b bis of the Swiss company law.
8.1 Compensation of active members of the Board of Directors
Annual salary Annual bonus
Company’scompensation compensation contribution to
TCHF
TCHF pension fundNumber ofoptions

Cash value
Totalof options compensation
TCHF6

Felix Bagdasarjanz 1, 2
Friedrich Fahrni 3
Anton Lauber 4Peter Rutishauser 5
Ueli Wampfler 2

133
79
73
82
60

–
–
–
–
–

–
–
–
–
–

1’125
938
938
938
–

50
42
42
42
–

183
121
115
124
60

Total

427

–

–

3’939

176

603

Annual cash Annual bonus
Company’scompensation compensation contribution to
TCHF
TCHF pension fundNumber ofoptions

8.2 Compensation of active members of the Senior Management

Total compensation to Senior Management

1’305

455

152

Cash value
Totalof options compensation
6
TCHF

10’500469

2’381

Highest compensation
The compensation package for the highest-paid member of the Senior Management in fiscal 2007/08 was made up as follows:
Annual cash Annual bonus
Company’scompensation compensation contribution to
TCHF
TCHF pension fundPaul Van Iseghem CEO
6

414

191

80

Number ofoptions

Cash value
Totalof options compensation
TCHF6

3’750

167

852

The cash value of the options has been calculated using the fiscal value of the options.

8.3 Shareholdings
Registered shares on 31 March 2008

Number of shares

Number of options

Board of Directors
Felix Bagdasarjanz 1, 2
Friedrich Fahrni 3
Anton Lauber 4Peter Rutishauser 5
Ueli Wampfler 2

1’400
7’300
300
2’000
3’000

2’375
1’938
1’938
1’938
–

Total

14’000

8’189

1’164
65
160
–
450
–

14’525
1’500
5’128
4’700
2’625
2’625

1’839

31’103

Senior Management
Paul Van Iseghem
Ageeth Walti
Hans-Dieter Huber
Luc Colombel
Simon Siggen
Eric Favre

President & CEO LEM Group
CFO
Vice-President Industry
Vice-President Automotive & Traction
Vice-President Operations
Vice-President Technology

Total
1

Chairman of the Board
Member of the Nomination & Compensation committee
Chairman of the Nomination & Compensation committee
4
Member of the Audit committee
5
Chairman of the Audit Committee
2357

AUDITOR’S REPORTLEM Holding SA
Report of the statutory auditors
to the ordinary shareholders meetingof LEM Holding SA
As statutory auditors, we have audited the accounting records
and the financial statements (balance sheet, income statement
and notes) on pages 51 to 57 of LEM Holding SA for the year
ended 31 March 2008.
These financial statements are the responsibility of the Boardof Directors. Our responsibility is to express an opinion onthese financial statements based on our audit. We confirm that
we meet the legal requirements concerning professional qualification and independence.
Our audit was conducted in accordance with Swiss AuditingStandards, which require that an audit be planned and performed to obtain reasonable assurance about whether thefinancial statements are free from material misstatement. We
have examined on a test basis evidence supporting theamounts and disclosures in the financial statements. We havealso assessed the accounting principles used, significant estimates made and the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the accounting records and financial statements
and the proposed appropriation of available earnings comply
with Swiss law and the company’s articles of incorporation.
We recommend that the financial statements submitted to you
be approved.
Geneva, 19 May 2008
Ernst & Young Ltd
Hans Isler(in charge of the audit)
Fredi Widmann

58

INFORMATION FOR INVESTORS

Number of registered shareholders
0–499
500–4 999
5 000–49 999
50 000 and more
Total

31.3.2008
348
55
13
3
419

31.3.2007
318
55
11
4
388

31.3.2008
38.6
31.5
1.5
0.0
28.4
100.0

31.3.2007
43.9
31.2
1.0
4.2
19.7
100.0

20.90
10.00
10.40
3.70
3.30
3.30

19.25
10.05
9.58
n.a.2
5.06
n.a.2

Shareholders by categoryin%Institutional shareholders
Private individuals
LEM employees, managers and board
Treasury shares
Non-registered shares
Total

Major shareholders (top 5 investors)in%Werner O. Weber
Threadneedle Asset Management Holdings Ltd1
Sarasin Investmentfonds SA
Erwin Studer
Powe Capital management Ltd
Joraem de Chavonay SA

Share price data
SymbolListingNominal value
ISIN
Swiss Security Number (Valor)
In CHF
Number of sharesYear high3Year low3
Year end3
Average daily trading volume (shares)3
Earnings per share
Ordinary dividend per share4
Extraordinary dividend per share4
Capital repayment per share
Market capitalization as per 31 March(in CHF Millions)Share information
LEHN
SWX
CHF 0.50
CH0022427626
2’242’762
FY 2007/08
1’150’000
368.00225.00270.00
1’316
18.40
7.00
4.00
0
310.5

FY 2006/07
1’200’000
270.75136.20270.75
1’224
13.32
4.50
0
0
311.4

Financial calendar: The financial year runs from 1 April to 31 March.
27 June 2008
Ordinary Shareholders’ Meeting
Geneva Business Center, Petit-Lancy
7 August 2008
First quarter results 2008/09
6 November 2008
Half-year results 2008/09
10 February 2009
Nine months results 2008/09
4 June 2009
Year-end results 2008/09
26 June 2009
Ordinary Shareholders’ Meeting
Contact:
Ageeth Walti (CFO)
Tel: +41 22 706 1230
e-mail: awa@lem.com
1

According to notification of not registered shareholder
Shareholdings between 3% and 5% only have to be notified since 1 December 2007.
Source Bloomberg
4
Proposal of the BoD to the Ordinary Shareholders’ Meeting
2
3

59

GROUP SUBSIDIARIESLEM is a global player with production plants and development
centers in Geneva (Switzerland), Beijing (China) and Machida(Japan) as well as adaptation centers in Russia and USA. The
company has sales offices at all its clients’ locations and offers
seamless service around the globe.
For a complete list of subsidiaries, offices and representatives,
refer to www.lem.com> Contact> Subsidiaries & representatives

Beijing LEM Electronics. Co. Ltd.
No1, Standard Factory Buildings
Sector B, Airport Industrial Area
CN-101300 Beijing> Jean Hinden
LEM Belgium sprl-bvba
Route de Petit-Roeulx 95
B-7090 Braine-le-Comte> Paul Leens
LEM Deutschland GmbH
Frankfurter Strasse 74
D-64521 Gross-Gerau> Martin Hoffmann
LEM France Sàrl
15, avenue Galois
F-92340 Bourg-la-Reine> Paul Leens
LEM Italia Srl
Via V. Bellini 7
I-35030 Selvazzano Dentro, PD> Paul Leens
LEM SAchemin des Aulx 8
CH -1228 Plan-les-Ouates/Genève> Jean Hinden
LEM UK Ltd.
West Lancs Investment Centre
Maple View
White Moss Business Park
UK-Skelmersdale WN8 9TG, Lancashire> Paul Leens
LEM Holding USA Inc.
11665 W. Bradley Road
USA – Milwaukee - Wisconsin 53224> Paul Van Iseghem
LEM USA Inc.
11665 W. Bradley Road
USA – Milwaukee - Wisconsin 53224> Kimbel A. Nap
LEM Japan K.K.
2-1-2 Nakamachi, Machida
JP-194-0021 Tokyo> Hiroaki Mizoguchi
TVELEM
P.O. Box 18
Marshal Budionny Str 11
RU-170023, Tver
> Alexander Semenov
LEM Holding SA
chemin des Aulx 8
CH -1228 Plan-les-Ouates/Genève> Paul Van Iseghem
LEM International SA
chemin des Aulx 8CH-1228 Plan-les-Ouates/Genève> Paul Van Iseghem

60

Impressum
Publication No. CH 28000 E(06.08 - 2.6 HRG)
LEM Holding SA, Geneva
Phone +41 22 706 11 11
Fax+41 22 794 94 78

Concept, Text, Graphic Design
and Product Photos
LEM
McCann Erickson
GenevaPhotosLEM
Frank Mentha
GenevaProduction and Prepress
K Genevaa Division of McCann Erickson
GenevaPhotolitho
Denz Lith-Art
Bern
Printing
Hertig+Co. AG
Lyss

LEM Annual Report 2007/08
Postal address
LEM Holding SA
P.O. BOX 785
CH – 1212 Grand-Lancy 1
Visitors’ address
LEM Holding SA
8, chemin des Aulx
CH – 1228 Plan-les-Ouates
Phone +41 22 706 11 11
Fax+41 22 794 94 78
www.lem.com

Annual Report
2007/08
At the heart of power electronics